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REPORTS 



OE 



Brig. Gen. George W. Davis 



02* 



INDUSTRIAL AND ECONOMIC CONDITIONS 



OF 



PUERTO RICO. 



WAR DEPARTMENT, 

r>rvisio:isr of xctsttxj^r appaies, 
1899. 



WASHINGTON": 

GOVERNMENT PRINTING OFFICE. 

1900. 



REPORTS 



OF 



Brig. Gen. George w. Davis 



ON 



INDUSTRIAL AND ECONOMIC CONDITIONS 



OF 



PUERTO RICO. 



. 






WAR DEPARTMENT, 
ZDITV-ISIOIISr OIB 1 IDNTSXJI-.^AK, AFFAIES, 

1899. 



WASHINGTON: 

GOVERNMENT PRINTING OFFICE. 

1900. 



1 



52697 

.0X2- 






'V 



REPORT 

OF 

BRIG. GEN. GEORGE W. DAVIS 

ON 

INDUSTRIAL AND ECONOMIC CONDITIONS 

OF 

PUERTO MOO, 
AS AFFECTED BY THE HURRICANE. 



Submitted September 5, 1899. 



WAR DEPARTMENT, 

ZDIVISIOINT OF IJSrSXJL^R, AFFAIRS, 

1899. 



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REPORT ON INDUSTRIAL AND ECONOMIC CONDITIONS OF 

PUERTO RICO. 



Headquarters Department of Puerto Rico, 

Civil Division, 
San Juan, September 5, 1899. 

Sir : The industrial situation of Puerto Rico is so deplorable and its 
future, under present trade conditions, is so discouraging, that I feel 
it to be my duty to. earnestly request the consideration of certain sug- 
gestions now presented in a tentative form. 

I am engaged in writing a somewhat lengthy report on the island 
and its military government, but that presentation can not be com- 
pleted for some days and the urgency of the present situation is so 
acute that I feel it justifies my course in making some preliminary 
observations and summarizing, somewhat, various points I shall treat 
of at more length in the report adverted to. 

Previous to the 8th of August the industrial situation here was far 
from satisfactory. In previous communications by cable I have 
adverted to that, but certain bold facts as bearing upon the business, 
production, and revenues of the island I now give, and in some respects 
repeat what has before been said. 

The normal exports under Spain had been about 18,000,000 pesos for 
several years and the taxes raised for the insular treasury and for 
Spain were about 5,000,000 pesos. The amount of municipal taxes 
would approximate another million, I suppose. 

The exports for calendar year 1898, the year of the war, have not 
yet been ascertained, but the total must have been much less than 
formerly. There is as yet some lack of precise information as to the 
amounts raised by taxes for insular and municipal treasuries. 

The exports during the current calendar year will show a great fall- 
ing off, while the present budget calls for an expenditure of about 
3,000,000 pesos. 

The exports will stand something like the following, in pesos : 

Coffee 7,000,000 

Sugar .; 4,500,000 

Tobacco 500,000 

Total -. 12,000,000 

For next year tobacco as an export may be eliminated, as it will be 
planted only in sufficient quantities to supply home consumption, but 
of stocks left there may be for export 500,000 pesos. 

The most sanguine estimate for next year, one-third of a normal 
crop of coffee for export, or, say, 18,000,000 pounds, which at present 
prices will net the producers about 1,500,000 pesos. 

If the destroyed or damaged sugar mills are all restored, the export 
of cane products may reach 5,000,000 pesos. 

5 



6 

Wo have, then, a total possible export of 6,500,000 pesos, or a little 
more i han one third the normal. 

li dors not require n demonstral ion to show thai the industrial con- 
ditions existing before the hurricane, bad as they were, are excellent 
by comparison with those resulting from the storm. 

Formerly bu1 two-thirds of the labor thai soughl employmenl al 30 
cents, American money, per day could seoure it, and now not one-third 
the labor is employed al aii3 rate of pay. A. hundred thousand or 
more individuals are being fed from the bounty of the \uieriban 
people, in some localities where the municipal governmenl was 
feeble and the town oounoils did aol oommand resped (and 1 am 
M>n\ to say these towns are not few in number), no collections what- 
ever of taxes can be made; some who oould pay will no1 because of 
their belief thai the contributions will be squandered; others make 
this belief a prctexl for nonpayment, and many others who wore well 
off have no means whatever with which they can even supporl their 
families, 

The ooffee lands suffered worst. These trees are planted on the 
hill and mountain slopes, and in many plaoes the declivities are very 
abrupt. Hie gale tore up the trees, loosened the soil, and the deluge 
of water converted the earth into a semifluid. 

Thou followed landslides, and thousands of aores of coffee planta- 
tions slid down into the valleys; trees, soil, rooks, and every vestige 
of culture are piled up in the bottom of the valleys. In such cases 
there is no restoration possible, for where there were smiling groves 
are now onl^ bald ro< ; li were uncovered by the avalanches. 

Where the soil was nol disturbed the most o( the coffee trees were 
eitlu »te< broken off, or stripped of foliage and the immature 

berries, Hie larger trees o\ other varieties, which are habitually 
iwn for sh lie coffee, were blown down, and their protection 

he coffee trees is also gone; so where the trees are not wholly 
denuded the prol erries from the sun's heal is absent, 

and the green fruit is - and spoiled. 

t- will take five years to reestablish thoso coffee vegas, and there 
will be necessarily years of want and industrial paralysis. 

To say thai this will deplete the - is unnecessary, (ov when 

purchasing power is wanting imports can not be made, li seems 
tbable thai the importations for the remainder of the year will not 
reach more than one-third of the estimate, therefore rigid economy 
will bo necessaryon everyhand. Bui for the fad that [brough.1 over 
from last ti- on to a half million dollars of a balance, I 

Id soo no hope of administering the government. 
\ would not bo surprising if it should become necessary to bor- 

i pay the iudispens - nses of the .; 

eminent. The present balance in the insular treasury is jusi 
an currej 

The sugar industry has suffered much loss than the others. Some 
cane has been ; and some has boon buried, and many mills 

ha\ stroyed, rhe margin >fit at present 

prices to the sn s - small, but there is a margin of proba 

a half cent per pound to the manufacturer who has modern machim 
but the old u Jamaica train" mills, which .". 5 damaged, will 

instructed, and the grov s 

on such estates unless owners can tu 

Man) will be unable to do this, so the p-\ 
much groM s to rot in 



The municipal governments are many of them prostrate; the police 
,.;,,, qoi be paid, the prisoners can not be fed, and the schools must 
be closed if not wholly supported Prom the insular treasury. 

From every town and village I am appealed i<> Cor financial help, 
donations; loans arc asked, implored even, and the alternative of 
chaos is predicted as the result of refusal. Proprietors beg for linan- 
( .j;,l help ;ui' l the homeless Tor rehabilitation of their dwellings. 

1 can think of but I wo measures of relief. Neither alone will fully 
realize that result, and wiili a combination of the two the recovery 
will not be immediate. Unless something is done by the invocation 
of powers beyond my control, I fear that the conditions prevailing 
will go Prom what is now extremely had to a still worse condition, 
even to the assumption in certain localities of military government 
pure and simple, with hordes of people dependent lor their existence 
on the bounty of the Governmenl of the United States and its people. 

I have abstained from any expression of opinion upon this matter 
until I could have time to investigate the real stale of affairs in 

which the island was left by the calamity, the like of which the 

people of the United States fortunately have and can have no con- 
cept ion. 

It is vilh hesitancy that I propose measures of relief that have 
been hitherto unknown; bul our country has by assumption of sov- 
ereignty over foreign lands and people i ncurred responsibilities which 
can not be evaded. By the treaty of Paris nearly L, 000,000 inhabit- 
ants of Puerto Rico have been brought nnderthe laws of bhe Union. 
They are unused to .American laws and customs, and have had In the 

past no power of initiation. They were taught and forced to rely 

upon the government in any and every important undertaking or 
proposition. They have been thoroughly taught to obey, hut know 
little of self-reliance. Is it surprising that the obliteration of one 
third of the wealth of the island, other than the soil itself, has been 
followed with industrial paralysis? So I have to hear the appeals, 
most piteous appeals, for help from almost every hamlet. They see 

no way to turn hut lo I he way they have always turned, i. e., to the 

Government, and as its representative here I must hear and dispose 

Of I hose appeals. 

Many millions of money as loans have been asked by municipalities 
and individuals. I can only give food for the hungry. Should the 
supply fail, there would l»e a famine such as in the past has swept 
over and depopulated large districts in India, and China. 

The proprietors are not able to rebuild ami repair and employ. 
They can not borrow, for I he banks will no! lend. 

While fin- agricultural wealth of the island is very large, the con- 
fidence of investors in the security offered is lacking. The 7 percent 
Water bonds of the city of San .luan, which have behind them a, ycry 
large and more than ample security, can nol be sold. The 7 per cent 
bonds of (he Agricultural Bank here, which are all secured on farms 

worth three limes the loans, can not be marketed. 

The measures of relief I have had suggested to me, and which I 
deem of sufficient importance to submit to the Government ill Wash- 
in, lit on, are: 

I. The removal of a II <l lilies on I rade bel W66U the I 'idled States and 
I his island. 

-. The authorization by the Washington Government for the Issue 
by i he insular authorities of interest-bearing notes in small denomi- 
nations to the amount of $10,000,000, the notes representing money, 



8 

to be loaned solely on landed security to the extent of ,30 or 40 per 
cent of the value of same, and no note to be issued save where a first 
mortgage on the land of three times the loan is behind it. 

For a further exposition of this measure I invite the attention of 
the Department to the copy of letter herewith of Mr. Cayetano Coll y 
Toste, the present civil secretary of the island. (See Appendix 1.) 

Whether or not the President has the power under the Constitution 
to authorize the issue of paper money in Puerto ts oo I do not enter 
upon. Such a question can be quickly resolved in Washrngpton. 

It goes without saying that any proposition to issue such money 
should not be entertained unless there be absolute certainty that the 
notes could and would be maintained at par. Notes bearing interest 
at 5 per cent, secured as specified, and made receivable for municipal 
and insular taxes, one-twentieth to be withdrawn and canceled each 
year, ought to be worth par. The island has now no debt whatever, 
and only three or four municipalities have any bonded obligations, 
the aggregate of all such not passing 750,000 pesos. 

Under Spanish government there were certain taxes laid that 
involved declarations by property owners as a basis of assessment. 
By these returns it is shown that the wealth of the island is not less 
than 250,000,000 pesos; but so little is the confidence of investors in 
the future that all loans, save at most onerous rates in special cases, 
are declined. This must continue until such measures are taken by 
the Government of the United States as will restore confidence ; but 
it has seemed to me that the notes of the island, secured in the man- 
ner proposed, would be maintained at par. 

I also invite the attention of the Department to another communi- 
cation (copy) addressed to me by the advisory board on insular affairs 
(see Appendix 2) appointed recently to consider questions of policy 
upon which I felt I needed advice. They are all business men of 
experience. 1 

I also inclose copy of another scheme for an insular loan prepared 
by Mr. A. Solomon, who was formerly the secretary of Special Com- 
missioner Carroll. (See Appendix 3.) 

This project of Mr. Solomon is of the same general character as 
that of the advisory board cited above, and contains a project for 
utilizing the Banco Territorial y Agricola de Puerto Rico. I also 
submit a copy of a communication I have received from this bank 
offering to take part in the placing of loans, etc. (See Appendix 4.) 

These questions of a loan relate to financial transactions of a very 
important character and I do not attempt to discuss them here at 
length. 

The proposition for an issue of insular notes for aiding the prostrate 
landed proprietors seems simpler, and is one for which I ask special 
consideration. 

In order that the Department may have some data respecting the 
present econonic situation, I inclose other papers that have been pre- 
pared by my directions. One is a statement of the agricultural wealth 
of the island (see Appendix 6), and the other is a statement of the 
present mortgage indebtedness which is of record in the offices of 
recorders of property. (See Appendix 7.) 

While it would appear from this latter paper that the landed pro- 
prietors already owe some $26,000,000, it has been suggested that the 
holders of the present mortgages would be willing to retire their own 

1 See G. O., No. 121, C. S., Headquarters Department of Puerto Rico. 



securities to second place so as to facilitate the borrowers in securing 
further financial help, without which the recovery of the proprietors 
would he impossible. Securing such help, these men would be able to 
work our to a condition of solvency and protect not only their own 
equity but really strengthen the security the first mortgagee nowholds. 

It will be seen from this last paper that of the total mortgage indebt- 
edness of 31,000,000 pesos, 11,000,000 were loaned without any specific 
interest. I understand that the borrowers of money, so denominated, 
iut\ e given their properties as collateral security so as to secure credits 
with banks and mercantile houses at financial centers. 

If this island could have free trade with the United States, not 
much more in the way of financial help would be needed. It would 
set all the wheels of industry in motion, for the margin of profit on 
sugar and tobacco would then be large enough to justify foreign cap- 
ital to come here, and it would come in large sums. This would give 
employment to labor, and the future of the island being assured, the 
coffee industry would derive indirect help, business generally would 
revive, importations would increase, and everything would receive 
new life and vigor. 

Free trade with the United States would, however, deplete the rev- 
enues, and if such a measure should be applied, probably all the 
custom-house collections would of necessity inure to the United States 
Treasury. Then the island would have no source of income save inter- 
nal taxation, and from this very little could be expected until the 
industrial recuperation became general. Deficits would ensue for two 
or three years. 

It is not easy to state more than approximately the probable cost of 
the civil government, but unless public works on present scale were 
suspended and school expenditures largely curtailed the total would 
not fall below 81.75u,000. 

If the United States took over the custom-houses, the General Gov- 
ernment would probably assume the expense of ports, posts, harbor 
improvements, and light-houses, but the residue of public outgo would 
far exceed the internal income. 

If the custom-house collections on goods from foreign countries 
could be left as our insular income, the deficit would be considerably 
reduced, for I would say that even under free trade with the United 
States the custom-houses ought still to collect at least a half million 
dollars a year. 

But. assuming free trade with the United States and all customs 
receipts dropped from the insular treasury, the situation would be 
somethmg like this, reliance being placed solely on internal revenue: 





Calendar year. 


Annual 
expenses. 


Annual 
revenues. 


Deficit. 


1900. 


SI. 750, 000 
1,750,000 
1,750,000 
1,750,000 


S5 r ».f//i 
1. 000, two 
1,500,000 

: 


SI. 250. 000 


1901 


7?A •. 000 


isoe 


251 '. 000 


1903 










Total 


7,000,000 


4,750,000 


2.250,000 









at for three years. £2.250.000. 

Therefore it is that the island would be obliged to borrow to carry 
on the functions of government until such time as the income from 
internal revenue should equal the outgo. 

With the granting of free trade and United States control of custom- 
houses would therefore come the obligations to provide to meet these 



10 

annual <h ftoits, and anj scheme which may be worked out for bridg- 
ing over this period must, it seems bo me, include a provision Cor bhis 
period ol I ransibion. 

I wish now only to make a general presentation, Financial minds 
in the United States could easily ■ bsI the details should favorable 
i.i 11 Washington be decided upon. 

I have been so engrossed in most pressing daily duties Mint 1 have 
been unable to do more Mian make bhis crude presentation, deeply 
regretting thai [cannot suggest bhe lull project; I ml if the" Departmenl 
i tblo bo and willing n<»\\ bo indicate its general policy upon bhese 
matters and wishes m\ cooperation, I shall be glad i<> apply myself in 
arranging o1 her matters or bo supply further information. 

\i\ annual report on civil affairs will be forwarded as required by 
October I, L899. 

I also inclose a communication from bhe Credito and Ahorro Pon- 
oeno, a banking Institution established in Ponce. (See Appendix 5.) 
Very reaped fully, 

Geo. \y. Davis, 
Brigadier- General, U.S. I., Comma/tiding. 

The Adjutant-General United States Army, 

Washington, D. C. 



A.PPBNDI2 i. 



S\.\ Ju \n. P. R., August SI, 1899, 

sik; The inn -i i. ane whioh passed over bhis island «>n the Nth instant has caused 
an ftlaj Mini- flnanoia) orisis. 

The wise Franklin said, "Credit is money." it is necessary bo resort to that 
useful principle to save the oo\in1 ry Erom ruin in the near future. 

The principal fountain of resouroi of the island that is to say, agriculture lias 
been terriblj Injured, [f lefl bo itself it would surely become worse and soon be 
totally plaj ed out, 

i ater on importation will be greater I ban exportation; and when a country con- 
sumes more than it produces, itsoapital rapidly diminishes, il becomes poor, and 
falls into financial ofi 

\ our banks and our Insulartrea urj lack greal resonrees.it is uecessaryto 

resori to the means thai eeouonue science advises To that science •• money 

paper " is nol bhe same as " paper money." 'The Eortner rests on bhe oertainty that 
the bearer can al an) tone change il into cash The latter rests on oredit, and 
ties on public confluence. England made use of the latter with its bank notes, 
and bhe united states with its greenbacks. 

Theremay bemanj ways of making a foreign lean. I take the liberty to submit 
iei your consideration the following one, of an official oharaoter, bo be made at 

home, in order that, if you are pleased to do so, you may in your turn submit it 

to the Govermnenl at Washington tor approval. 

Considering thai bhe agricultural wealth and oattle industry of the island 

amounts to 56,797,742 pesos and 80 centavos, 18,644,584 pesos in agricultural 

ane, coffee, tobacco, pasture lands, and other cultivation, and 8,038,158 

. and -.v oentavos in sumpter oattle, swine, black cattle, and small cattle, 

therefore a loan for the amouni ol' $10,000,000 could surely be made in the Eollow- 

\. That the Government allow the insular treasury of Puerto Rico to issue notes 
to UOO for bhe amount ol $10,000,000. 

9, That the landholders who are in need of financial aid may, up to 90 per cent 
Of the real and actual value oi their arable land, be granted loans in these notes, 
provided bhe proper proceedings and sworn valuations of experts is had and the 

proper mortgage on the estate in favor o( the insular treasury is given, 

: bhis money be loaned bo them at 5 per cent yearly interest, payable in 

twenty years, in twentieth parts and in cash or in said notes. 
•I, That the said notes be made payable to bearer. 

r>. That they be admitted in the payment of municipal taxes and internal revenues, 



11 

C. That the first amortization begin on the 31st of December, 1901, and that the 
- to the amount of — Jthdrawn from circulation by the insular 

treasury each year thereafter. 

7. That the annual intere.-.t paid on these loans to the iusular treasury be used 
to pa] ' peases of issuing the note the budget the this 

year that have been remitted int of the daim.. I by the hurricane 

and to construct schoolhousee and ol lie works. 

. h is of necessity interested in this proposed loan to agricul- 

ture, utter depends on the life and pi -of the former, shall vol- 

untarily accept tin I notes without any depreciation whatever, and that 

banks, ban and chambers of commerce bind then. an agree- 

ment to do the same in order to facilitate d capital and 

and thus avoid the hateful procedure of the coerciriv- 
spectfully, 

Cayi )ix v Tos 

we&ary. 
Brig. Gen. G 

■General oi "Puerto B Juan, Puerto I 



KNDIX 2. 

HJBADQUABTKBS DEPARTMENT OF PCBETO B 

P 

Sir: Ti. ry board of insular policy have the honor to snbmil con- 

sideration the . . report on the loan el for the relief of the island 

distribute it. 

Gr leed, the havoc wrought in the island by the hurricane of the Hth 

instant, just at the moment when theproduc 

capital in e 
lack of markets where: 

that such must hav sing 

circumstances to which the li ted. 

We aj ire of the fact that the wealth of the island is based on its agri- 

are no butl 

i 

the 
rtire. and 
,weritha 
to the relief of agriculture. 
Ti. seclude thj 

rral disas- 
ter, shoul vernment 

modern life, so . y connected with e 

with the necessary resources for th a 

. but natural, therefore, that •■ imunici- 

manner we a: - 
reor running expenses: and thei: 

reduced, 

Dg to f 

well-* the influx of indire- 

The condition of the ond ail that the 

.-lands must 
i readily suggest! 

er the rich] rilaad the 

working habiti tion 

■ 
hav: 

pressed r. turn, the island ma . ;. 000.000 v ount 

of capital anc. for tin ntly 

the liquidation of t. >8paa- 

I 
Th jssity of the loan and the 

d is in detenu: 
has the aothoi ollateral. 

.r coming these uore than abundant in the 



12 

.1 i mii mii::, aentera of the world, where there la a oonstant clamor for its invest" 
in. 'in ii i i tte oi Interest more or leaa moderate, according to the security offered. 

h latruethal the Island la no1 yel constituted within the organi atiOn which 
ponds to the olaaaifii ttiona of oolonj Territory, or State, [1 baa not a gov- 
ernment whioh, like those ot the two last olaasiflcations in the Union, is vested 
with authority bo oontraot loans; Its condition ia that of a military occupation, 
and Its administration devolves upon the President is the absolute and supreme 
powej I'ui ii i iWli' authority, who is vested with all the faculties of the 

■•>.. mm.', the legislative, and the ludioial powers of the American Constitution, 
can u. m Li!, the meana and resources to meet the wants of the people he governs 

aii authors ou public laws, and specially so those w booomment the great Ameri- 
can Constitution, agree on the principle that when a person or corporation is 
. barged with a dutj w la vested with some authority,in both rases they are sup- 
plied booarrj out the formerand toenforoe the latter, said meana 
mi ied iv the same pea ion oi corporation rendering the service and 
withnoothei responsibility than that whioh may be derived from the oonstitu- 
preoepts, 
[i the P Sent of the United St ites Is therefore empowered togovernand see 
the administrat on of the Island, it is a natural sequence that he is also 
vested with authority to employ whatever humus be taj consider proper and 
advisable to satisfactorily oarry on his funotions, If the requirements of the 
isUn\vl should oommand the Investment of us own revenues, they should be so 
n and if these reve • t sufficient on account of some extraordinary 
circumstances, and there are oo other indirect revenues a\ ailable, it is e\ ident that 
IS authority to raise a loan to be secured by the revenues intrusted to his 
direction 

i ,; | to oontraot a loan has been acknowledged, 
er- should be considered. The amount required to 
emergencies brought about by the present circumstances could be 
• this amount to be represented by bonds of $100 and $500, 
coupons, the rate of interest to be fixed at 4 per cent per 
annum, payable quarterly, but not in advance, either in this island or in New 
N - ! . ■ . - e returned in thirty years, but the redemption is not to begin 

until the sixth year after the issue of the bonds — that is, during the last twenty- 
vears in a pro] tot less than the amount corresponding to the divi- 

v the number of years or larger if the government of Puerto 
The redemption will be made by yearly drawings and 
. to a bank or syndicate for a consideration 
•oral security or guaranty to consist of all 
fl, especially so the custom-hot 
In regard to the investment of the loan, the board will not for the present deter- 
mine vmts, making this question the subieot of a special study. In the 
first 3 our opinion that a given amount should be turned into the public 

BOt of making up for shortness in the revenues or to 
imp.. -cart pub'. : (n the second plaee all the municipalities which 

•sire it and ask for it will be loaned money. The general terms of these 
lows: 
Ee : wen ty years, partial payments thereof to begin 

. year at a rate of inte i per cent per annum, payable every six 

moat S - he municipalities will be made when the number of these 

has ' ad upon, and those lacking the necessary conditions of life have 

aued. The thus furnished will be applied to the relief of 

• and out of town, the municipalities taking i 
structed be built in barrios more or less thickly 
setth ; locality, as w I on of 

- .-try halls - --. etc. 

In ied to the improvement and 

- daily of those who.. cultivation of 

- these funds will be ma 

. spai Banco Terriie . through any 

other whose capital may be wholly or in part devoted to loans on mortgage. Each 

mnn . vmined upon, that they 

- 3 - : observance of the following rules: 

Loans w.' ured by mortgages on country or city properties at 6 per 

.: annum : : sceed twenty years. 

:erms of paym. 
ss ■ . - be paid in advance. Settlement 

mus r annually, even though it has been agreed 



13 

that no payments on account of the capital will be made during the first five years 
of the loan. 

3. Mortgages on properties will be admitted up to 80 per cent of the value of the 
land and establishments thereon. 

4. In no case can the banks intrusted with making the loans and holding a mort- 
gage on a property which is to be increased receive in any way or shape or at a 
discount payments in advance of any of the pending obligations, unless the same 
transaction be simultaneously and in due proportion made in regard to pending 
obligations in connection with the new mortgage. 

5. The bank will not charge the debtor any expense or commission, excepting 
the notary's fees for the drawing of the deed and its inscription and those that 
may be incurred in appraising the property. Should it become necessary to con- 
suit a, lawyer, this will be designated by the bank, and his fees can never exceed 
$25, to be paid by the debtor. 

6. In making the distri bution of these funds the banks will act as the commission- 
ers of the island's treasury and will be duly empowered tojgrant deeds, make col- 
lections, cancellations, and any other documents in connection with the contract, 
but they can never go to court to exert any rights without a competent authorization 
thereto. 

7. The banks are under the obligation of rendering an account to the treasurer- 
general of the island, or to such authority as may be determined upon, of whatever 
transaction they may be practicing, forwarding copies of all the documents. They 
will also render a statement of all collections made and of such obligations not 
paid thirty days after their maturity; the same remarks applying to the half yearly 
or yearly interest due and not paid. They will not be able to grant extensions 
without an express authorization therefor. All collections will be turned into the 
island's treasury. 

8. The banks will only be entitled to a commission of one-half of 1 per cent on all 
amounts invested and one-half of 1 per cent on all amounts collected. 

9. it will be the duty of the banks loaning money to coffee and sugar-cane grow- 
ers to procure the association or amalgamation of neighboring farmers in order to 
give rise to central factories, distilleries or stills, or any other establishments of 
common utility and application. 

10. The b .nks do not assume any other responsibility than that which refers to 
the fulfillment of duties in a general sense, as provided in articles 1101 to 1104, 
both inciusives. of the civil code. 

The writers of this report were agreeable to all its points excepting that refer- 
ring to the amount of the loan, Mr. Egozcue having consigned his private vote, 
stating the loan should be increased to $15,000,000. 
Very respectfully, 

Fran'co de P. Acuna, Vice-President. 
M. Paniagur, Secretary. 
Brigadier-General Davis, 

Commanding the Department. 



Appendix 8. 

Project for ax Insular Loan and Disposition Thereof. 

general order authorizing an insular loan. 

1. A general order shall be issued, authorizing the financial agents of Puerto 
Rico in the United States of America to offer for public or private subscription a 

loan of $ . the subscription to which shall be deposited with a trust company 

in the United States, in exchange for letters of allotment and certificates of deposit, 
pending tne printing and delivering of the bonds. 

2. The general^ order shall state — 

(a) The period of duration of the loan (not less than fifty years). 

(b) The rate of interest to be paid (not more than 6 per cent). 

(c ) That the loan must be issued at par. 

(d) That the loan shall constitute a first lien on the present and future income 
of the island until repaid. 

(e) That the bonds shall be of the denomination of S . 

(/) That the bonds shall bear interest coupons maturing semiannually, payable 
in the city of New York. 

(g) That the loan 1 shall be repayable by a proportional yearly redemption of the 

bonds at par by drawings, the first drawing and redemption to be effected 

after the loan is floated. 



14 

(h) That the loan contract must contain a conversion clause. 

( i) That Messrs. and are constituted a board of insular 

trustees to represent the island in its contract with bondholders and to sign the 
bonds. 

(j) That interest and redemption must be provided for in the annual budgets of 
the island. 

(Je) The approximate taxable value of the island according to data obtained by 
the ex-secretary of hacienda for use in the budget of 1899-1900. 

(I) The solicitor-general *s opinion as to the legality of the loan under existing 
legislation. 

A certified copy of this general order to be sent to the financial agents of the 
island in New York. The governor-general's signature thereto should be witnessed 
by the clerk of the United States provisional court. 

DISPOSITION OF THE LOAN. 

1. The sum of $ shall be set aside for public works. 

2. The sum of $ shall be set aside to make good the probable deficit in the 

current budget. 

3. The sum of § shall be set aside for the payment of the first year's inter- 
est, the expenses of floating the loan and printing the bonds, and for other unfore- 
seen expenses. 

4. The balance shall be employed as follows: 

As one of the principal objects of the loan is to assist agriculturists, and that aa 
speedily as possible, it would be advisable to make use of such financial machinery 
as already exists, if it can be done in such a manner as to allow the insular gov- 
ernment due intervention in the disposal of the funds and remove same from all 
taint of political influence. The Banco Agricola is an established institution which 
already possesses an extensive knowledge of the standing of the agriculturists of 
the island, and is managed on a purely commercial basis. A few additions to its 
statutes which could be suggested and authorized by the military government 
would undoubtedly convert it into the most ready and convenient instrument for 
the distribution of the balance of the loan in such a manner as to be beneficial to 
the agriculturists and profitable to the insular treasury, or, in other words, the 
people of Puerto Rico. I therefore propose that — 

A general order be issued authorizing the Banco Agricola to increase the emis- 
sion of its shares to the extent of $ (the balance of the loan), said emission 

to be taken by the insular government at par. The government shall then be 
allowed to name its representatives on the bank's board of directors in proportion 
to the number of paid-up shares of the bank held by it. The government would 
thus receive its proportion of profit earned by the bank, would at any time be able 
to dispose of the shares should these be quoted at a premium, and would, through 
its representatives, have proper intervention in the affairs of the bank without 
having to loan money directly to agriculturists, such being considered as outside 
the functions of national or state administration. 

The available lending capital of the bank would be nearly doubled by the issu- 
ance of mortgage bonds, which would find a ready quotation on the exchanges of 
the United States, especially if the bank were obliged to deposit an amount with 
some trust company as a guaranty for the titles of the holdings mortgaged as 
security for its loans. It is doubtful if the insular budget would at any time have 
to be burdened by making provision for interest on this portion of the loan, while 
it is very probable that the profit earned by the bank would go a long way toward 
paying the interest on the amounts employed in public works, etc. , or at least 
toward the partial amortization of the debt. 

Rules governing loans to agriculturists, both as regards amounts, term, condi- 
tion of payments, rate of interest, and other items, could be studied later and 
passed by the bank's newly formed board of directors at the first meeting held, 

A. Solomon. 



Appendix 4. 

San Juan, Puerto Rico, August 16, 1899. 

Sir: The undersigned directors of the Banco Territorial y Agricola of Puerto 
Rico, in accordance with the instruction received by us, respectfully beg to state 
to you the following: 

This bank is the only one in the country which has been organized in behalf of 
the agriculture, and to the same has devoted its capital. 



15 

Closely connected with the agriculture interests, no one but this bank is so well 
acquainted with the farmers, knowing their needs and also how far their wealth 
can be developed according to their resources. 

The dreadful hurricane of the 8th of this month, causing greater ravages than 
any other known in this island, imposes the necessity of facilitating without delay 
to the land owners the means of recovering their farms from the havoc suffered. 

The Government of the Union, and you as its worthy representative in Puerto 
Rico, as well as (you know) other leading citizens, are planning to obtain means to 
remedy their present conditions. Among them beyond doubt the most efficient 
would be a loan of from fifteen to twenty millions of dollars that would be made 
by the Government to the farmers on reasonable terms for reimbursement. 

In order to complete this project and to facilitate its being carried out, the Banco 
Territorial y Agricola would be the best qualified to serve as intermediary between 
the Government, which would advance funds on good securities, and the farmers, 
who would find it easier without doubt to deal with this bank, already established 
and devoted only to this kind of trade. 

This bank, by its way of doing business, similar to that of the Credit Foncier of 
France, makes its mortgage loans at terms of from six to thirty years, according to 
the conditions and security of the farms, taking a first mortgage on them, this 
business being carefully looked into by the board of directors, composed of men 
of responsibility and experience in commerce and trade agriculture. 

Secured by good mortgages, the bank issues mortgage certificates at an interest 
of 7 per cent per annum, which are paid with the collections from the farmers 
every year , 

These certificates have, besides said security of safe mortgages, the general 
guaranty of all the stock of the bank, which is obliged to make the collections and 
payments in due time, thus increasing more and more its credit. 

Considering what we have stated, the bank proposes to the Government to be 
intrusted to loan to the farmers the amount of said loan on the following condi- 
tions: 

1. The bank, according to its statutes, which do not allow it to loan more than 40 
per cent upon the appraised value of the property, will make the loans to the farm- 
ers on first mortgage, allowing them from six to thirty years' time and charging 
the same interest that the Government may designate, the bank being allowed a 
small commission for its work and expenses. 

2. Secured by these mortgages the bank will issue mortgage certificates with 
interest coupons attached at the rate that may be designated by the Government, 
payable in the United States or in Puerto Rico. The redemption of said bonds will 
be made through a sinking fund, as provided by the bank's statutes, and will be 
made payable in the United States or in Puerto Rico by means of the annual pay- 
ments of the mortgagers. 

3. The Government will gradually deliver to the bank the amount of the loan 
against or in exchange for an equal amount of certificates as transactions may be 
realized. 

Thus the Government, while perfectly secured by the mortgages of landowners 
and the subsidiary guaranty thereon of the bank, can come at once, and without 
delay, to the help of the island. As the bonds are payable to the bearer and they 
stand as a circulating medium, the capitalist in the United States will soon be 
interested in them, knowing the securities they afford, buying them as invest- 
ments, thus aiding the Government in the proposed loan. 

Another reason why our proposition should be accepted is that the land credit 
of the island, which is the base of Puerto Rico's wealth, would be increased and 
that undoubtedly the bonds issued by the bank would be bought by the European 
banks, contributing in this way to the prosperity of Puerto Rico. 
Very respectfully, 

VlCENTI ANTONITH, 

Enrique Delgad 
N. Oyauguren, 
Brig. Gen. George W. Davis. 



16 

[First indorsement.] 

Headquarters Department of Puerto Rico Advisory Board, 

San Juan, August 30, 1899. 
Respectfully returned to the honorable Brig. Gen. George W. Davis, commanding 
the Department, inviting his attention to the report on a general loan recently 
submitted by this board to his consideration, which covers all the points of the 
within communication. 

M. Panigua, Secretary. 

Fran'co de P. Acuna, Vice-President. 

Appendix 5. 

Ponce, Puerto Rico, August 25, 1899. 

Sir: The board of directors of the Credito and Ahorro Ponceno, a banking 
institution established in Ponce, believes it to be one of its most rudimentary 
duties to raise its voice to the honorable representative of the metropolis to coop- 
erate for the immediate upbuilding of the wealth of this island, which was so 
heavily chastized on the 8th instant by a cyclone in the daytime and by an 
immense inundation, caused by the overflow of the rivers, at night. 

It is needless for us to undertake to distract your attention with the details of 
the many disasters that have occurred, so much deplored by every man with 
humane feelings. The press furnishes daily official and public information as to 
the great losses caused by the cyclone and flood, which have done damage to such 
an extent that not a single inch of soil on the whole island has escaped the effects 
of its destructive power, besides the loss of many lives. 

Before a disaster of this nature the island of Puerto Rico finds itself unable to 
attempt to rehabilitate its wealth with its own resources, owing to its capital 
being invested in agricultural enterprises. The loss of the crops not only shatters 
all hopes of covering the financial obligations that weigh upon the agriculturists 
and merchants, but it is fearful also to consider the thousands of hands employed 
and who thus made their living for themselves and their families, and who must 
now remain idle, with starvation staring them in the face. This great evil must 
necessarily be avoided, and it is very urgent to relieve this worthy class of people, 
who may make an honest living by their daily labor, and we propose to accom- 
plish it hy placing the agriculturists on a fair working basis. 

The money reserves now existing in the native banks will soon be drawn to cover 
the deficit which results between the imports and exports of the present year, and 
with these reserves thus withdrawn the most horrible misery will prevail through- 
out an island worthy of a better fate. 

Before such a disconsolating perspective we can see only one way out of the 
difficulty, and it is to apply to the powerful nation under whose tutelage Divine 
Providence has placed Puerto Rico, and of which you are a most worthy repre- 
sentative, and to you, illustrious General, who have so often showed your great 
desire to lighten our burden, we address ourselves, requesting a helping hand to 
save our country from utter ruin. 

Persuaded as we are that the inexhaustible charity and generosity of our coun- 
trymen, as well as that of the American people and Government, will undoubtedly 
aid us freely with means to relieve the most peremptory necessities of these unfor- 
tunate people, still it is absolutely necessary to provide for the future. 

As things now stand there is but one way to assure this end, and that is to raise 
large sums of money to upbuild the country. 

This money can only be obtained by means of a loan, and with this view the 
board of directors, of which I have the honor to be president, has agreed so sub- 
mit the following suggestion, viz: 

To solicit from the honorable President of the United States or from the hon- 
orable Secretary of War the authority for the military governor of this island to 
emit bonds of §100 each, to cover the amount of from $20,000,000 to §25,000,000 
gold, with the direct guaranty of the treasury of Puerto Rico, and further guaran- 
teed by mortgages on real estate of such owners as may make use of the loan. 

The terms for the repayment should be twenty-two to twenty-seven 3'ears, pay- 
ing in the first two years only the interest, which shall be at the lowest possible rate, 
not exceeding 5 per cent per annum; the capital after the second year, besides the 
interest. Taking into consideration the noble end for which this loan is intended, 
it should be equal, in a legal standpoint, to that of the taxes in accordance with 
the actual mortgage laws; that is, the legal mortgage in preference to any other 
that may be a lien upon the real estate, which is its direct guaranty, and the 
proceedings for the collection should be also the same as those actually in use for 
the levying of taxes. 



17 

This preference, far from causing prejudice to actual mortgage creditors, would 
benefit them, as the loan tends to restore to real estate a guaranteed value which 
it now lacks, and would become evident if they, unheedful of the dictates of pru- 
dence and humane sentiments, should resort to judicial proceedings to demand 
the payment of their capital. Aside from this, the postponement of their rights 
in exchange for the true increase in value of estates, will place them in better 
conditions to realize their credits, inasmuch as the privileged debt would be en- 
tailed at long terms and with so low an interest that, adding the interest to the 
annual payments, would represent a smaller amount than that of the usual and 
current interest in the market of Puerto Rico for operations of this kind. 

The loan is intended to rehabilitate agriculture in all its phases and to give it 
new life. 

In t,he general budget for the island would be included each year the necessary 
amount to pay the interest and installment of the debt, this amount being covered 
by those paid by the landowners who may make use of the loan. 

The treasury of Puerto Rico is undoubtedly capable of efficaciously responding 
to the loan, as there are no debts pending. The fact that in the years 1873-1889 it 
covered a loan of $11,000,000 for the abolition of slavery, making annual payments 
of §700,000, conclusively proves the extent of its resources. That debt was reli- 
giously paid by the taxpayers without affecting the progress of the country, not- 
withstanding the defects of the administration at that time. 

The general budget for the expenses of the island in the fiscal year 1898-99 
amounted to §4.446,952.31, of which $2,631,000 were received from custom duties, 
$410,000 from -territorial contributions, and §240,000 from industry and commerce. 

Computing the taxes on the basis of 5 per cent of the net rent, it results that 
the $650,000 collected from the taxpayers was on a rent of §13,00J,000, which rep- 
resents a capital of §260,000,000, adding to that amount the value of public build- 
ings and other belongings of the State, province, and municipalities, which do 
not pay taxes. 

The last statistics (Balanza Mercantil). published in the year 1897, show the 
following amounts: 



v,!,,. Custom-house 

value - duties. 



Imports 

Exports 



SIT, 858, 063. 29 
18,574,678.45 



$2,481,962.57 
241,310.10 



Total 



36,432,741.74 



2,723,272.67' 



These data and those preceding demonstrate the solvency of the treasury of 
Puerto Rico and the guaranties which it is able to offer to the American people to 
assure the scrupulous fulfillment of the contract that may be made in its name 
with the sacred end for which this loan is intended. 

In regard to the legal conditions of the island as to this responsibility, it is unde- 
niable that Puerto Rico, being ruled by a military governor having discretionary 
power, under direction of the honorable President of the Republic and the Secre- 
tary of War, that there should be no insurmountable obstacles to its actual lawful 
chief representative assuming such responsibilities as are necessary to save the 
wealth of its people and to assure its future well-being. 

After this loan is realized the Government will agree upon the form for its 
most equitable distribution; but this board respectfully recommends that as coffee 
raising has been the most heavily injured and takes longer to be rehabilitated, it 
should participate in the loan in a larger proportion than other branches and 
industries. 

Trusting in the proverbial benevolence and in the repeated proofs of your love 
for this country, the board of directors of the Credito y Ahorro Ponceno requests, 
through me. that you may exert your influence to obtain the required authoriza- 
tion for the loan of §20,000,000 to §2o,000,000, and also for its most convenient 
placing in the markets of the metropolis with the urgency that the sad state of the 
country requires. If you do so, honorable General, you will receive the blessings 
of the present generation and your name will merit the remembrance of the next. 
Very respectfully, 

X. Mariami, President. 

Brig. Gen. George W. Davis, 

Commanding Department Puerto Rico. 
13101 2 



18 



Appendix 6. 

[Military government of Puerto Rico, office of the civil secretary, San Juan, Puerto Rico.] 

Statement of Agricultural Wealth of the Island of Puerto Rico in 

the Year 1897. 

Stock raising in Puerto Bico in the year 1897. 



Cattle of all kinds. 


Number 
of 'iead. 


Price 
each. 


Price, 
total. 




67,751 
4,467 
717 
303,613 
3, 055 
5,779 
13,411 


Pesos. 

30 

30 

30 

30 

5 

4 

5 


Pesos. 
3,032.530 




134,010 




21,510 




6,072,240 




10,275 




23, 116 




67,055 






Total 






8,360,736 











Cultivation. 
FIRST DISTRICT. 



Town 



San Juan — 

Bayamon 

Carolina 

Dorado 

Naran jito . . . 

Loiza 

Rio Gde 

Rio Pdras . . . 

ToaAlta 

Toa-Baja 

Trujillo-AIto 

Caguas 

Aguas Bnas . 

Cayey 

Cidra 

Gurabo 

Hato Gde 

Juncos 

Comerio 

Total .. 



Num- 
ber of 



365 
1,264 
625 
232 
481 
555 
462 
1,013 
380 
275 
366 
728 
472 
778 
500 
976 
1,083 
520 
378 



11,453 



Sugar 
cane, 
cner- 
das. 



1 

509 
534 

288 
•> 

1,114 
245 
499 
136 
649 
36 
607 

~~"~10' 

4 

723 

469 

758 
13 



6,597 



Coffee, 
cuer- 
das. 



40 

303 

1.311 

3,348 

938 

220 

823 

74 

1,064 



10,657 



To- 
bacco, 
cuer- 

das. 



332 


3 


98 


3 


136 




896 


48 


370 




424 


2 


189 


5 


76 


6 


15 





132 

5 

33 



3 

119 
142 



634 



Grain, 

cuer- 
das. 



38 
679 
526 
166 

1,048 
896 
498 
775 
369 
154 
398 



1,603 

'772 
860 
851 
620 
753 



12,413 



Other 
culti- 
vation, 
cuer- 
das. 



336 

340 

29 

73 

339 

652 

92 

226 

92 

14 

65 

92 

113 

106 

132 

20 

1 

5 

142 



Pas- 
ture, 
cuer- 

das. 



2.859 



556 

21,632 
19.272 

7,289 

6,784 
20,408 
16,088 
22.321 
12.052 

8,215 
11,256 
20.957 
10,060 
16,004 
16,338 
12. 448 
29, 910 
11.815 

7,924 



271,335 



Other 
pur- 
poses, 
cuer- 



1,692 
16, 199 
7,639 
5,915 

7,914 
8, 692 

11,202 
5,508 
2,457 
4,980 
858 

12,334 
7,913 

10,8:58 
1,844 
3,239 
608 
2,943 
8,411 



121,186 



Total, 
cuer- 
das. 



2,613 

39,694 
28,101 
13,867 
17,031 
32, 132 
28.551 
39.523 
15, 188 
14, 027 
12,655 
35. 313 
2(1,021 
31,942 
20,066 
17, 603 
32, 671 
10.334 
18, 449 



425,681 



Land 
valua- 
tion, 
pesos. 



69,378 
753,951 
454, 008 
223, 620 
247,502 
351,200 
250, 154 
374,501 
109, 704 
386,954 

94, 849 
449,998 
310, 108 
737,731 
269,032 
279, 820 
210,578 
183. 745 
277, 535 



6,034,368 



SECOND DISTRICT. 





3,068 
518 
792 
707 

1,606 
558 
449 

' 745 
840 

1.996 
'687 
539 
994 


3,409 

420 

176 

136 

389 

1,477 

509 

37 

5 

33 

113 

' 881 

1,142 


1,596 
853 
540 
476 
15,075 
368 
949 

3,993 

3,793 
860 

1.409 
147 
104 


5I3 

433 

183 

398 

33 

50 

15 

8 

6 

8 

8 

2 

83 


2,071 

1,319 

822 

863 

5, 874 

745 

646 

1,995 

3,098 

1,474 

1.013 

'484 

679 


222 

98 
322 

45 
1,265 
162 
625 
147 
157 

18 
142 

93 
176 


39,573 

13.129 

16:314 

10.055 

30,813 

7,062 

6,134 

6, 069 

12, 738 

16,657 

14,688 

5,152 

12,283 


37,090 
10,482 
8,692 
1,292 
48,344 
16, 436 
10.672 
27,450 
33,643 
8,300 
7,596 
10, 199 
13,036 


74,504 
36, 633 
37. 049 
13, 155 
101, 793 
36, 300 
19. 550 
39, 698 
43,439 
37,349 
24, 969 
16,958 
36, 505 


1,185,374 


Camuy H-. 

Hatillo 

Quebradillas 

Utuado 

Manati 

Barloiieta 


' 348,306 
450, 753 
183, 388 
3, 928, 963 
586,216 
399,062 
807, 768 




653, 766 




231,046 


Morovis 

Vega-Alta. 

Ve^a-Baja 


496. 798 
175,364 
506, 464 


Total . 


12,501 


8,716 


30,163 


1,668 


20, 982 


3,475 


180,667 


233, 131 


467,803 


9, 952, 167 



THIRD DISTRICT. 



Aguadilla 


658 
1,517 
1,587 

788 
1,622 
1,135 


418 
1,082 
223 
30 
307 
172 


33 
310 

332 
6,098 
1,860 
4,158 


26 

2 

336 

7 
5 
2 


1,427 
1,228 
2,514 
1,938 
1, 136 
1.370 


224 
243 
269 
222 
128 
440 


11,271 

14. 150 
19. 020 
30.380 
16, 541 
37, 340 


4,399 

1,106 
10, 749 

1,949 
10, 083 

3,S16 


17, 798 
18, 181 
34, 433 
40, 620 
30.063 
46, 098 


245,234 

294, 940 


Isabela 


229. 409 
1. 386, 278 


Moca 

S. Sebastian 


493.236 

1,166,233 


Total 


7,307 


2,232 


12, 791 


378 


9,513 


1,526 


138,605 


31, 163 


186,207 


3, 815, 330 



19 

FOURTH DISTRICT. 



Mayaguez 


1,866 

1,099 

3,033 

381 

1,145 

716 

343 

563 

993 

1,305 


1,171 

1,463 

1,533 

1,455 

985 

28 

2 

303 

1 227 

2,679 


6,050 

3,768 

93 

106 

111 

10,969 

8,622 

44 

768 

1,486 


4 

21 

2 

9 

100 

198 
161 


1,369 
627 
1,875 
351 
4.086 
1.265 
2, 147 
1, 051 
3,650 
3,555 


545 
100 
558 

39 
133 

53 
188 

88 

61 
367 


31,076 

14,586 

23,431 

4,196 

24, 714 

14, 716 

8,584 

6, 534 

15.758 

23,715 


3,492 

5,117 

11,056 

351 

7,562 

3,905 

2,751 

28 

2,791 

2,217 


33,707 
24; 660 
38,546 

6,500 
37,529 
31,036 
22 294 

8^048 
22,453 
23,080 


2,188,515 
1,131,151 


Cabo-Rojo. . 

Hormigs. --- 

Lajas 

Las Marias 


641,147 

273,550 

493,106 

2,395,742 

1,189,216 




120,888 


Sabana Gde 

San German 


396,835 
1,132,764 


Total 


10,441 


'.).*::; 


31,017 


496 


17,976 


2,031 


157,300 


39,270 


257,923 


9,963,914 



FIFTH DISTRICT. 





1,555 

496- 

663 

789 

2,165 

227 

141 

1,040 

1,098 

1,546 

2,001 


6,417 

30 
56 

4,213 

'906 

■ 1,328 

579 

38 

792 

1,669 


6, 259 
2,618 
1,206 
1,580 
3,551 
333 
2 

2,098 
8,809 

1,787 
4,452 


4 

&31 

55 

3 
121 

20 
111 

12 
222 


3,199 
1,562 
1,389 
1,675 
3,456 
529 
159 
3,945 
4,171 
2,343 
5,569 


616 

75 

260 

271 

292 

157 

12 

107 

1,530 

236 

518 


26,259 
8,760 
10, 607 
24,340 
43, 701 
21.499 
13.102 
18,023 
13, 593 
15,138 
33,549 


23,288 

7,953 

8,856 

25,094 

6,582 

20,492 

7,052 

7,662 

16,911 

10,111 

18,011 


66, 043 
21,299 
22,303 
53,019 
61,916 
43,815 
21,675 
31,535 
45,053 
30,319 
63,990 


3,434,434 


Aibonito 

Barranq'tas ----- 
Coamo 

Jilana Diaz... ,„ 


434,693 
538,479 
663,134 
1,504,357 
633,539 


Sta. Isabel. 

Guayanilla 

Adjuntas 

Feiiaelas _ 


768,537 
790,498 

3,563.498 
691,312 

1,767,743 






Total 


11,721 


16,028 


32,594 


839 


26,797 


4,074 


227,571 


152,013 


459,955 


13,789,103 



SIXTH DISTRICT. 



Guayama 

Arroyo 

Maunabo 

Patillas 


642 

319 

454 

1,029 


2,261 

38 

1,867 

1,590 


1,286 

244 

78 

1,032 


35 
7 

61 
32 


742 
332 
282 
762 


105 

20 

96 

1,068 


16,945 
6,226 
3, 653 
8,105 


18, 756 
3,054 
6,859 

17,328 


40, 130 
9,921 
12.896 
29,917 


1,029,585 
214,512 
249, 416 

432,677 


Total 


2,444 


5,756 


2,640 


135 


2,118 


2. 189 


34,929 


45,997 


92,864 


1,925,190 



SEVENTH DISTRICT. 



Humacao 

Las Piedras 


863 
979 

1.021 
507. 
367 
632 

■ 530 
189 


1,614 
319 

2.260 

2,386 
959 
978 
452 

3,426 


20 
198 
198 
279 

62 

1,559 

181 


37 

10 

20 

1 

i 

l 


607 
645 
917 
214 
224 
360 
474 
268 


86 

no 

140 
66 
72 

406 
38 

104 


31, 793 
16,395 
16, 636 
14,137 
9,415 
14,110 
18,199 
15,994 


3, 259 
2,333 

14.397 
3,585 
3,907 
8,134 
6,798 

11,109 


26,416 
20,010 
34,568 
20, 668 
14. 646 
35, 538 
36,143 
30,901 


497,555 
105,547 
690, 737 


Fajardo 

Ceiba.. 

Luquillo 

Naguabo 

Vieques 


396,131 
333,643 
371,776 
337,807 
592.276 








Total 


5,086 


12,394 


2,497 


77 


3,709 


1,023 


136,679 


53,513 


198,890 


3,215,472 



RECAPITULATION. 
[11 cuerdas=1.0255+acres=lj 1 B acres, approximately.] 

Number of estates -- - - -- - 60,953 

Sugar cane - - - Cuerdas. . 61,556 

Coffee - - do.... 122,358 

Tobacco --- do 4,227 

Grain „ - do..-- 93,508 

Other cultivation --- - do 17.176 

Pasture - - — do.-.. 1,127.086 

Woodland and swamps and barren - do 664, 270 

Total. do-... 2,090,181 

VALUATION OF LAND, AS STATED BY THEIR OWNERS, FOR TAX PURPOSES. 

Pesos. 

First district - 6,034,368 

Second district - 9,952.167 

Third district. — - - 3,815,370 

Fourth district ..-. - - - --- 9,963,914 

Fifth district - - 13,789,113 

Sixth district- .— 1,925.190 

Seventh district - 3,215,472 

Total -- 48,694,583 



I 



REPORT 

OF 

BRIG. GEN. GEORGE W. DAVIS 

ON 

INDUSTRIAL AND ECONOMIC CONDITIONS 

IN 

PUERTO RICO. 



Submitted December 15, 1899. 



WAR DEPARTMENT, 

DIVISION OF INSULAR AFFAIRS, 
18 9 9. 



21 



supplementary report. 

Headquarters Department op Puerto Eico, 

San Juan, December 15, 1899. 
The Adjutant-General United States Army, 

Washington, D. G. 

Sir : Upon the industrial and economic conditions of Puerto Eico 
I have previously reported at some length. The very distressed situ- 
ation of the island, as left by the tornado of last summer, and its need 
for financial help were made the subject of a special report, dated 
September 5,last. The time elapsed since that paper was sent off has 
been devoted to attentive study of the needs of the island, and I have 
felt constrained by a sense of duty to present these farther remarks 
for such consideration of the Department as they may deserve. 

In the early days of September, when the referred-to report was 
written, I was in the midst of the relief work. As then stated, full 
data respecting the extent of the destruction and suffering was not 
available. 

During the past three months, by personal observation, reports of 
personal investigations by military officers, and verbal statements of 
proprietors, investors, and other close observers, I have secured the 
data for a partial revision of my former figures and of the text of the 
conclusions then presented. 

As respects the number of persons who on August 8 lost all, or about 
all, but their lives, the original estimate was close to the truth; that is 
to say, the numbers of the class referred to aggregate about a quarter 
of a million. Nor was the extent overstated to which they were victims. 
In one particular, however, it was understated. These poor peones 
were left without the material (palm leaves) with which to rebuild their 
huts, for the tornado decapitated every palm tree in its path. Fortu- 
nately, the climate is mild, and the suffering from a lack of shelter was 
slight. It was only the sick who really suffered, for they had no pro- 
tection from the summer rains. Medical service was deficient and 
medicines unobtainable at first. There are no hospitals and could be 
none save those that the board of charities improvised. 

The destruction to roads was rather more than I reported, above 
$100,000 of insular revenues having been already spent in repairs, and 
as much more will be required to reconstruct and rebuild. Some impor- 
tant bridges must wait until next year. 

Tobacco suffered very little, but the loss of the Cuban market had 
already disarranged planting, and as the crop had been harvested, 
there was no growing crop to injure; but the tobacco laborers suffered 
to the same extent in loss of huts, provision crops, etc., as all other 
peones. 

Sugar cane was greatly injured by overflows and sedimentation, but 
was benefited — i. e., fertilized — by the same for future crops. 

There was extensive injury to sugar mills, some of which, being old 
and obsolete, will never be rebuilt. 

23 



24 

The cane which will be ground next spring may produce about 45,000 
long tons of sugar, against an average of 58,925 long tons for the last live 
years of Spanish domination. 

These figures of cane products are obtained by taking actual exports 
of sugar, as given in official statistics, and same for molasses, counting 
1 ton of sugar for 2 tons of molasses. This is done so as to bring the 
molasses to a basis of sugar value. 

The crop for export for the calendar year 1899 is closely approximate. 
The custom-house figures for exports (official) from American occupa- 
tion (which varies at different ports from July 28 to October 18) to 
September 30 show, of sugar and molasses, 44,310 long tons, the latter 
computed at 1 ton sugar for 2 of molasses. 

The opening of one or two new sugar mills, which were building before 
the storm, may maintain next spring's tonnage at the aggregate of the 
last year's crop for export, or, say, at 45,000 tons. 

This crop of sugar at this year's prices — about 80 pesos per ton — 
should therefore bring an income to the island of 3,GOO,000 pesos, or 
$2,160,000, as a maximum. 

In my report of September 5 I stated this at 5,000,000 pesos, and in 
report of September 30 at 60,000 tons; but revised and better studied 
figures give but $2,160,000 as the value of the sugar for export. 

In September I also estimated this year's coffee crop at 33 per cent 
of a normal one, or, say, 18,000,000 pounds, or about one third of a 
normal output; but it appears that this estimate is not borne out by 
experience. What the tornado spared has now been harvested, and 
very careful and close inquiry reveals the fact that the yield varies 
from to 33 per cent of an ordinary crop. I can find no well-informed 
person who believes that the total yield for export will exceed 10 per 
cent of a normal crop, the average having been for last five years of 
Spanish domination 23,732,078 kilos, official figures. 

Of the crop harvested last winter and exported this year, the cus- 
tom-house officers report 29,487,329 kilos, which is somewhat above the 
normal export. It is conservative to estimate the total of this year's 
growth available for sale abroad at not more than 3,500,000 kilos. 

The average of prices obtained for coffee during the five years re- 
ferred to was 51.9 centavos per kilo, or 23.6 centavos per pound, which is 
equal to 14^ cents gold. The loss of markets, and especially the Cuban, 
reduced the value of coffee to the producer to about 9 cents gold; but 
the restoration of the Cuban market, by recent Executive order, has 
practically restored the price, so that what remains on hand of the 
former crop and what may be sold from the one of this year will bring 
an average of about 12 cents, gold, per pound. 

Taking the salvage from the hurricane at 2,273,000 kilos, or 5,000,000 
pounds, it is readily seen that for this year the insular income from 
coffee will be only $600,000 instead of the normal figures of over 
$6,000,000. 

My original opinion that the crop would fall off but two-thirds was 
based on the opinion that certain somewhat sheltered regions would 
give a half or two-thirds crop, and that other localities would make a 
showing of from a quarter to one-half, for enough berries were left on 
the bushes to justify this opinion; but the hope has proved illusory. 
The berries that survived have been largely blighted,, and as the 
necessary shade was gone, the direct rays of the tropical sun scorched 
and shriveled the green fruit, and much of what remained was worth- 
less, and the harvest is most disappointing. 

There are hundreds of coffee groves, indeed thousands, where no 
more remains than will suffice for home consumption, or none at all ; and 



25 

in the least exposed groves the quality is poor and the quantity is 
disappointing. 

I shall be agreeably disappointed if the harvest surpasses 10 per 
cent of a normal crop. A few sanguine persons have expressed the 
belief that the percentage may reach 15. 

The only other crop of magnitude that, exported, yields a revenue to 
the producer is tobacco. During the last five years under Spain the 
exports averaged 3,938,052 kilos, selling for 750,809 pesos, or 19.4 cen- 
tavos the kilo, which is equal to 5.3 cents, gold, per pound. The poorer 
grades went direct to Europe, netting the producer 4 to 6 centavos per 
pound, and the better to Cuba, realizing from 25 to 35 centavos; but 
this market is now closed by a prohibitive import duty of $5 per pound. 
Exported to the United States, the better grades pay a duty of $1.85 
and the poorer 35 cents per pound. Duties on tobacco are high in 
European countries, and as a consequence of these high taxes in all 
markets there is little commercial movement for this important Puerto 
Eican product. 

In my cable of August 28 to the Assistant Secretary of War I esti- 
mated the tobacco then in the island at 4,000,000 pounds, which is about 
a normal crop'. Since then some of this has been sold in Europe, a little 
in the United States, in leaf or manufactured, and a little has been 
exported to Cuba. The American Tobacco Company has lately bought 
the largest manufactory here, and the new management is understood 
to be arranging for a larger trade with the United States, the product 
of manufacture to be in the form of cigarettes. 

The ever-recurring hope on the part of the inhabitants that there 
will soon be free trade with the United States, combined with the fact 
that some American capital has been invested in this industry, has 
stimulated the tobacco interests somewhat, and the planting of the 
new crop now going on will, contrary to my formerly expressed opinion, 
be of somewhat more magnitude than that of last year, probably yield- 
ing at least a normal crop of 4,000,000 pounds; and, at present prices, 
this would net to the producers about 750,000 pesos. 

The custom house returns show exportation since Spanish evacuation 
to September 30 of three and a quarter million pounds of tobacco, 
which includes some old stock of 1898, and this has brought returns to 
the farmers of about $200,000; while the unsold residue now in the 
island may raise the total income for the sold and to be sold, i. e., the 
whole crop of 1899, with residue from 1898, to perhaps $400,000. 

In my cablegram of August 28 I said that next year's crop would 
be less than for this year; but the hopes of free trade with the United 
States and other causes, previously adverted to, have so stimulated 
planting that account may reasonably be taken of a harvest equal to 
the normal. 

The foregoing as respects the reasonably certain output for this year 
of the three great staples, and giving also the average export under 
Spain for five years ending 1897, we have the following: 





Staple. 


Estimated 

value for 

export. 

1899-1900. 


Actual 
average 

export. 
1893-1897. 


Reduction. 




$600, 000 

2, 100, 000 

450, 485 


$6, 080, 409 

2, 403, 963 

450, 485 


$5, 480, 409 




303, 963 












Total 


3, 150, 485 


8, 934, 857 


5, 784, 372 







26 

Here, then, is a presentation of the facts, as I interpret them, regard- 
ing trade conditions. The principal falling off is in coffee, which, as a 
commodity for considerable export, will not exist. This year's output 
of the three great products, compared with exports of the last five years 
of Spanish control, shows a falling off of very nearly Go per cent of the 
insular wealth available for current needs. 

The island has a few minor resources, but the aggregate of all exports 
other than the three staples amount to but a few hundred thousand 
dollars, and some of them are showing greatly diminished quantities 
and values. 

The most important of these are live stock, but the exportation ot 
beef brings another evil, an enhancement in the local value of fresh 
beef, so that it is quite too costly a food save for the well-to-do classes. 

But the appalling diminution in exportable goods is not the worst 
feature of the existing situation. Credit is absolutely gone for all, 
save the sugar and tobacco producers, who have visible security. 
While the present price of sugar yields a margin of profit, there is 
little confidence that the ruling price will be permanent, unless the 
trade conditions are changed for the better. The best grades of cen- 
trifugal sugar sell for about $50 per ton net to the producer, but not 
more than half the cane products are of this grade. The muscavado 
sugar commands but about $40 per ton, or a little less, and at this 
price there is little or no margin of profit. It is only the large, central 
establishments that are now prospering. 

The sugar output touched its maximum in 1870, 170,000 tons, while 
last year it fell to less than 45,000, or but a little more than one-fourth 
of the maximum. Very large expenditures in new plants and in 
restoring cultivation must be incurred before the sugar output can be 
increased, and this can not be made for the present. 

The coffee fields, now smothered in weeds, uprooted trees, and debris 
of the storm, can not be cleaned and rehabilitated without capital, and 
this can not be secured. This year's sales of home productions in these 
commodities will bring returns of but about $3,000,000, whereas the 
island is accustomed to receive almost $10,000,000 for these same 
products, and there is nothing to replace them. 

The condition of more than half the inhabitants has always been one 
of abject poverty. It is not difficult to foretell the consequence of the 
obliteration of two-thirds of former means of subsistence. It is doubt- 
ful if any land or district populated by nearly a million souls has, in 
modern times, been so devastated and overwhelmed as was Puerto Eico 
in one day of August last. 

Heretofore coffee represented 70 per cent of the island's trade, but the 
next crop will probably not exceed 6 per ceut of that value — the aver- 
age of which, for the last five years, having been over sixteen and a half 
million pesos, representing the value of exports of the three principal 
commodities. 

The industrial depression falls heaviest upon agriculture, for the 
island has no other source of wealth. To some extent this presses upon 
the cane growers and sugar makers, first, because in many cases they 
have only obsolete machinery for fabrication, and, second, because the 
mills have been overturned or injured; but the heaviest depression is 
with that all-important industry, coffee culture. It is a melancholy fact 
to state, but it must be stated and weighed — there is not one coffee finca 
in twenty, and not more than one coffee proprietor in twenty, who is 
not bound hand and foot financially, so far as the present situation is 
concerned. While in a great many cases the coffee bushes are not so 



27 

disabled that they are past redemption, yet the power of redemption 
is gone. The land is left, most of the bushes remain, much of the 
shade is not wholly or permanently destroyed, an abundance of labor 
for rehabilitation and cultivation is at hand and clamoring for employ- 
ment at customary wages, yet complete paralysis exists; and this is 
due to the fact that credit — the life of all modern commerce — is totally 
destroyed for this industry save for a very few well-to-do owners. 

Aided zealously by those under my orders who are charged with the 
application of the food relief donated by the United States, and after 
most careful consideration, a method of relief was conceived that it was 
thought would insure not only relief for the destitute but at the same 
time aid for the landed proprietors, who are the customary employers 
of the laborers. The scheme is outlined in the circular herewith, to 
which is attached a memorandum showing the extent to which this form 
of relief has been applied. 

While the method is being successfully installed and executed, it 
does not accomplish all that the acute necessities demand. The pro- 
prietors have come forward in very large numbers with appeals for 
assistance, but rigorous investigation in each case is imperative, so as 
to assure that the true facts are known and the statements verified. 
But since the proprietor has no means of paying wages, and can obtain 
none, the workmen are much less efficient than they would be if a cash 
remuneration were included, so the effectiveness of the labor is much 
impaired, and not a great deal in the way of clearing up the coffee 
groves can be accomplished, or but very small areas can be cleaned. 

The knowledge that wages can not be paid until quite a year has 
elapsed, and the fear of the proprietors whose property is already 
mortgaged and in arrears for interest and taxes that the owners of 
the mortgages will probably foreclose as soon as they have the power, 
discourages the proprietors, who do not know that they will to morrow 
have even an equity in the property. So very little confidence or hope 
is felt by those most deeply interested, and when there is no hope there 
is no zeal or energy. "What is the use," they say, "of trying to fight 
against the inevitable? The mortgagee will soon have the land. Let 
him do the clearing up and restoration." 

The statistics available as to the number and extent of coffee prop- 
erties are not of much value, and the data at hand do not give the 
valuation of these properties. Included in the census returns of 1887 
there are some figures that may be taken as approximate only. The 
declared valuation of all the landed property in the island is there given 
at 28,867,929 pesos ; but this is not believed to represent more than 
one-eighth of the real value of the agricultural wealth of the island. 
(See record of mortgages herewith.) 

The records of the registers of property show that on country prop- 
erty the mortgage indebtedness at the end of 1893 amounted to over 
26,000,000 pesos, but I have not yet been able to assure myself if these 
figures do not include a large number of incumbrances that have been 
lifted. I believe that this is the fact, but can not yet positively assert it. 
Bankers and other investors have told me that the total indebtedness 
of the coffee proprietors, including secured and unsecured debts, 
amount now to not less than $8,000,000, and nearly all are debts over- 
due. The sugar lands, which are in the same condition, will, it is esti- 
mated, amount to two millions more. I am quite willing to accept these 
figures as indicating the volume of the obligations of the agricultural 
properties, all of which are in jeopardy. 



28 

The year of the war was, necessarily, one of uncertainty and hazard. 
Capital, which is proverbially timid, was withheld froii those who 
needed it most, or, if given, the conditions were onerous. If exten- 
sion or increase of loans were then secured, the bonds were tightened 
by the grantor and the grantee's liberty of action was correspondingly 
restricted and curtailed. 

During the period of hostile operations and following, bandits and 
outlaws raided the island. Great quantities of coffee were forcibly 
taken, houses and mills burned, and the people terrified. The sufferers 
could not secure financial help, and the economical situation of these 
people became desperate, and so continued after peace and order were 
established. 

By the disturbance of trade conditions, and by the war itself, com- 
mercial and social conditions were greatly disturbed. Laborers and pro- 
prietors were so terrified that industrial work was curtailed or stopped. 
The currency of the island was discredited, exchange was high, and 
trade and agriculture languished. It followed, as a natural consequence, 
that the accustomed volume of coffee, sugar, and tobacco were not pro- 
duced. Statistics of exports from and after June 30, 1897, to the Ameri- 
can occupation have not been compiled, so it is not known what was the 
extent of the reduction of exports, but the falling off must have been 
considerable. A part of the exports reported above for the period since 
the American occupation included commodities that would have been 
exported and reported before June 30, 1898, had there been no war. 

Coupled with this social and economic disturbance came the loss of 
important markets, especially Cuba and Spain, which circumstances 
increased the commercial depression. The military government did all 
possible to relieve the situation. Trade was made much freer than 
before. The free list was largely extended, local-consumption taxes 
were removed, tonnage taxes were no longer collected, and the duties 
on several important articles of insular use and consumption were 
greatly lowered. The local military expenditures were large, which 
put much money in circulation, and local purchases or engagements of 
commodities and services for military use somewhat relieved the 
depression, but the enonomic situation after six months or a year of 
American occupation was much worse than before the troops landed. 

This is my conception of the industrial situation as it existed at the 
close of the fiscal year 1898-99, but business was adjusting itself to 
the new conditions, a few new sugar mills were going up, larger areas 
of cane were being planted, and the coffee producers had confidence 
that the crop of 1899 would exceed by 7,000,000 kilos the crop of 1897, 
which sold for over $7,000,000; but all this was changed in one day, 
for on the 8th of August last this confident hope was changed to the 
most gloomy discouragement or almost despair. The gro wi n g provision 
crops of half a million people were destroyed, the shelters of a quarter 
of a million were blown away, the roads were washed out and obstructed 
with landslides and debris, 2,700 people were killed, besides many 
thousands of cattle, and, finally, the coffee crop for 1899, worth proba- 
bly 15,000,000 pesos, was practically blown out of existence. 

About one year ago the gloomy situation of the proprietors who were 
so heavily in debt was brought to the attention of the military gov- 
ernor, the late General Henry. The extent of their indebtedness, 
which consisted of matured loans and those soon to mature, was stated 
to him as very large. It was also pointed out that a great many fore- 
closure proceedings of agricultural properties were then in progress. 
As military governor of Puerto Rico, which was then held as territory 



29 

conquered from Spain, between which, power and the United States a 
state of war still existed, General Henry was asked to forbid the fore- 
closure of mortgages for one year, so that the disturbance in economic 
and industrial conditions could have time to pass away and disappear, 
which all believed would be the case within the period named. They 
counted upon a good harvest and hoped for and expected that very 
soon the trade conditions of the island would have been adjusted so 
that better prices could be secured. 

The investors, credit institutions, and mercantile houses represented 
to the general that while those interests could probably be so adjusted 
that the proposed disturbance of contract obligations would not very 
seriously embarrass them, yet they also pointed out that the general 
effect upon the borrowers would not be an unmixed blessing, for the 
arbitrary interference of the supreme government with the validity of 
contracts respecting secured loans would tend to so unsettle and dis- 
turb the relations between the borrowers and lenders that the latter 
would hesitate or refuse to make the further advances which would 
certainly be asked. 

After full consideration of all the facts and circumstances the gen- 
eral decided to prorogate the foreclosure of mortgages, and on January 
19 signed an order to that effect. It was immediately published in the 
Official Gazette of the island, and appears also as General Orders, Xo. 
18, under date of February 12, 1899, Headquarters Department of 
Puerto Rico, copy herewith. 

The order was thoroughly respected, and the result has been that 
since its promulgation no foreclosures have taken place and the equi- 
ties of all parties interested have remained undisturbed, but the year's 
interest in many cases remains unpaid. 

The publication of this order is understood to have been an arbitrary 
exercise of the power of the military commander and warranted by the 
laws of war, but at the time of this transaction commissioners repre- 
senting the United States and Spain were sitting in Paris and nego- 
tiating a treaty of peace between the two Governments. 

The treaty was signed by the commissioners on December 10, or more 
than a month before General Henry ordered suspension of mortgage 
foreclosures, but the exchange of ratifications of the treaty by both 
Governments was not effected until April 11, 1899, on which date this 
treaty became the law of the land. 

A phrase of the second paragraph of Article VIII of the treaty of 
Paris is as follows : 

And it is hereby declared that the relinquishment or cession, as the case may 
be, can not in any respect impair the property or rights which by law 

belong to the peaceful possession of property of all kinds, of provinces, municipali- 
ties, public and private establishments, ecclesiastical or civic bodies, or of any other 
associations having legal capacity to acquire and possess property in the aforesaid 
territory renounced or ceded; or of private individuals, of whatsoever nationality 
such individuals may be. 

It seems to be clear that had the Paris treaty been promulgated at 
its date, or on any date anterior to the time of publication by General 
Henry of the mortgage order, then the order in question would have 
been illegal, as in violation of a law of the land, i. e., the treaty, admitted 
and recognized by both Spain and the United States, and by its terms 
made applicable to Puerto Pico. 

As before stated, the order was a war measure, and related to a period 
of time when, in a technical sense, a state of war between the two coun- 
tries was continuing. Xo question has been raised, so far as I know, 
involving a judicial determination as to the validity of the order after 



30 

the promulgation of the treaty, but it seems to me a matter of doubt if 
the courts would have upheld the order after April 11. 

It is, however, clear that whether or not the vitality of the order 
suspending foreclosures was continued after the date last given, it 
would be clearly illegal now to extend its provisions. I have been 
appealed to to make a further prorogation and also not to make it. 
In order that there should be a clear knowledge of my conception of 
duty in the premises, I have made public announcement of the fact 
that there will be no extension of the provisions of the order respecting 
mortgages which the military governor issued in January of 1899,, 
(See copy of announcement herewith.) 

The deplorable industrial condition in which the island is, and the 
release from restraint of those who had power to foreclose and take the 
properties representing many millions more value than the secured 
debts, and which surplus of value the owners can not protect, will bring 
about a situation in Puerto Kico compared to which the present, bad 
as it is, will be easy and comfortable. 

A large part of the mercantile and exporting houses are owned and 
conducted by Spaniards, men who, under the treaty, preserve their 
Spanish nationality. A great many of the natives who are in debt — 
and almost every one who could secure credit is in debt — are at the 
mercy, so to speak, of these creditors. The seizure of these farms by 
the money lenders, who are often hated only because they are Spaniards, 
will, in the minds of some, be regarded as confiscations, although done 
in the name of and under the sanction of the law. The robbery, 
pillage, and incendiarism which have been adverted to as accompanying 
and following the military operations were largely based on this hatred, 
I am told. I hope the foreclosures soon to occur will not cause a revival 
and recurrence of the former lawlessness. Of course it will be repressed, 
if there should be an attempt to rob, burn, and destroy. I merely allude 
to it as a possible occurrence. 

I have no doubt that the alarm in some cases is groundless; certainly 
in many cases the creditors will make arrangements with former owners, 
and since the properties will be valueless unless worked, it will be to 
the interest of the new owners, or those having the power to secure 
titles, to arrange for advances, either as additional loans or as working- 
capital to clear up and cultivate the coffee lands which now are rapidly 
becoming only tropical jungles — the weeds and trash already over- 
topping the coffee bushes. 

I do not think the aggregate of these mortgages, as compared to the 
former value ot the lands, is excessive. The trouble is that now the lands 
have no cash value. Nobody will buy at any price, and a great many 
wish to sell. Attempts at tax sales have sometimes not resulted in a 
single offer. 

In time, of course, all this will adjust itself. Soon a permanent gov- 
ernment will be created, one possessed of powers to legislate and govern, 
and which will be respected as the regularly constituted authority. 
When this is consummated confidence will take the place of doubt and 
distrust. Enterprises will be started or resumed, capitalists will find 
how to secure their investments, and, if with the legislation establish- 
ing a government comes the hoped-for grant of free trade with the 
United States, cane and tobacco culture will be extended. Fruit cul- 
tivation for export will be taken up, and perhaps agriculture can be 
diversified in many ways. Cacao is cultivated profitably in other lands ; 
so, too, are rubber and hemp ; but nothing can now be initiated through 
individual effort, for everything is beset with the difficulties adverted 



31 

to. The crux of the whole matter is that the municipalities, the coffee 
proprietors, and some caue owners are without credit. They are abso- 
lutely powerless to secure any linancial assistance from insular or exte- 
rior sources, and are doomed to inaction, decay, and disaster unless help 
be given. 

The trade conditions are well illustrated by the receipts of the custom- 
houses. For the first five weeks after July 1 the receipts from customs 
were $ 174,537, and for the last preceding five weeks the total was $84,828, 
a falling off of more than 51 per cent in the second period. Perhaps 
one-fifth of this depletion of the revenues may be due to the extension 
of the free list on my recommendation, but certainly the largest part of 
the loss is due to the industrial depression. 

The effect of this reduction of income upon the revenues of the island 
will of course be -very marked, and embarrassments seem certain to 
occur. The general situation of the finances for the first five months 
of this fiscal year is shown by the auditor's statement herewith,wherein 
are set forth in some detail the receipts and disbursements. 

When the annual budget was prepared, the expectation was justified 
that from imposts of all kinds and miscellaneous receipts, except back 
taxes; $465,000 would be collected. In September these figures were 
revised and reduced to $300,000. An income from back taxes due 
under Spain, but remaining uncollected, of $100,000 was counted on; 
but it is now evident that not more than a moiety of the sums relied 
on can be secured. The prostration in business has left the taxpayers 
without resources, and there is no practicable way of collecting what 
is due save by seizure of the property, but such a course would not 
secure the taxes these properties owe, for, if offered for sale, buyers 
could not be found. Forcible seizure at this time would be a great 
hardship, and such seizure I would decline to order, as it would amount 
to a confiscation and be an added hardship to the burdens which are 
already overwhelming in a great many cases. 

/it is currently reported that the President has recommended to 
brnigi'ess the removal of all trade restrictions between this island and 
the United States; also that a government be immediately established 
that will possess all the requisite attributes for conducting the affairs 
of the island the same as a Territory or Stater 

If the change in status involves the application to Puerto Eico of 
the United States revenue laws— internal and customs— then the prin- 
cipal source of revenue that Puerto Eico has relied on will be lacking. 
A thorough revision of the present system of taxation is demanded. 
The need of it is most urgent, but as this is a matter of the greatest 
importance I have not felt that it was my duty as a temporary custo- 
dian of the island to enter upon such an undertaking. I have, how- 
ever, given to the subject very earnest thought, and have studied it as 
opportunity permitted. 

If the island is to receive no direct benefit from customs and internal- 
revenue taxation, then the local expenditures must be provided for by 
property and income taxes, as in the States of the Union; but under 
the existing conditions not one-quarter of the revenue needed to carry 
on local government, insular and municipal, can be collected through 
present machinery and under existing laws. The laws must be revised 
and the machinery set in motion. 

The combined insular and municipal Puerto Eican budgets for the 
current year aggregate about $3,500,000. Certainly, if the million 
people here are to have the advantages and privileges which inhabit- 
ants of the States of the Union enjoy, the revenues must be doubled 



32 

or trebled. The present tax rate per capita is about $1.75, while the 
smallest tax rate per capita for population in any West India island 
(except Cuba, for which data are lacking) is $4.50, and the highest 
$11. 'i 8, which applies to the island of Trinidad. Other rates are: 
Curacoa, $4.01; St. Thomas and Santa Cruz, $7.43; Guadaloupe, $7.24; 
Martinique, $6.66; Jamaica, $4.69; Barbados, $4.73; The Leeward 
Islands, $4.75, and British Guiana, $8.55. These figures include taxes 
of all kinds, including customs and export taxes, etc. 

Assuming a tax rate of $5 per capita for Puerto Pico, and population 
of one million, the levy should amount to five millions, two-fifths of 
which would be required by municipalities and the remainder by the 
central government; one million of the latter amount would go to 
schools, another to public works, leaving one million for the insular 
government proper. But it will be several years before a system of 
taxation can be devised and applied which, without counting customs 
and internal revenue, such as in the United States inure to the Gen- 
eral Government, will yield any such returns as these. When the 
island is exporting twenty millions or more in value of home production, 
which it should be doing in five years, the economic conditions will 
easily permit the raising of a local revenue of $5,000,000, but the 
interval of time will be one of great financial difficulties for the govern- 
ment, and the only remedy I can suggest is a loan with which to tide 
over this period. 

In my report of September 5, I indicated the probable deficit based 
on the assumption that the expenses be limited to $1,750,000, and that 
there be no income from customs and excises, etc. The amount above 
stated included nothing for municipalities and was the least with which 
it seemed to me that the government proper could be carried on, unless 
allowances for public works and schools were cut off or reduced. Those 
figures still stand as an expression of my best judgment of the situa- 
tion, which it should be understood takes note of the supposition that 
municipal expenditures would be covered by local and town taxation. 

The foregoing sets forth my conception of the present financial con- 
dition and my judgment regarding industrial affairs, but in respect to 
the latter it is difficult to conceive of a more unsatisfactory situation. 
By a calamitous incident the island of Puerto Pico upon the morning 
of its new life is deprived of 65 per cent of its resources. The proprie- 
tors are without credit, and the present temporary government is unable 
to^apply a remedy or afford relief. 

\At this time it may be assumed that the National Legislature is con- 
sidering the important subject of a form of government for Puerto Eico. 
Supposing that question settled and a government authorized conform- 
ing to the United States territorial type, or to some other form such as 
the President and Secretary of War have been pleased to recommend, 
the question may be asked, " What would be the economical and indus- 
trial condition, supposing that there is no provision included in the 
organic law for solution of the financial difficulty ?" The answer must 
be that the recovery will of necessity be slow, and the difficulties and 
embarrassments very great. 

The new government must take some time to organize, and when 
installed will be confronted with the necessity of taking up at once the 
subject of revision of tax laws, upon which there must be legislation. 
It is to be assumed that the organic act will make clear whether or not 
the island is to maintain its own custom-houses and exploit the internal 
revenue so it will not be beset with the uncertainties which confront 
the present government. 



33 

But meanwhile, the agricultural conditions, if remaining unaided, 
will be going from bad to worse. Unless the weeds and trash in the 
coffee groves are suppressed, the fruitful bushes will be smothered and 
killed, or so greatly damaged that they must be uprooted and others 
planted. The laborer will be idle and the island will retrograde. 

The new government will probably be obliged to borrow in order to 
maintain itself, and this will be a matter demanding immediate action; 
but no matter how soon that action be taken, it will not be in time to 
save the coffee culture. It may be toward the close of the session 
before Congress will definitely act, and all this time will be days of 
waiting and anxiety, for nature will be constantly aiding in the relapse 
of the coffee groves to tropical jungles. 

Free trade with the United States will give a great stimulus to 
agriculture, and specially to sugar and tobacco ; but this will not affect 
coffee, which is already free. The general stimulus to other cultiva- 
tion will perhaps have a detrimental effect upon coffee. If a largely 
increased acreage be devoted to these crops for which free trade is 
desired, there will result an increased demand for labor, which will be 
drawn from the high interior and other regions where coffee only is now 
largely produced. If a scarcity of labor results, an increase of wage 
rate must be expected ; an increase which sugar producers can well 
afford to pay if they secure as an advance to present selling price 
what is now contributed as United States customs duties, i. e., say $35 
per ton. The sugar growers will then be as rich and prosperous as 
are now the Hawaiian planters, and as high wages can well be afforded 
here as in the Sandwich Islands; but coffee can not be cultivated 
profitably at all on a basis of higher wages than are now paid — that is, 
30 cents per diem for men and 20 cents for women. If the current 
wage rate should go to 50 cents (gold), coffee culture, at present prices 
of the product, must cease altogether. The result here suggested as 
possible is exactly what did happen in Cuba when, fifty years ago, 
considerable coffee was grown for export, but which is not now because 
labor is too expensive, and cane culture is much more profitable. 

In short, the condition of the coffee industry is one of great jeopardy; 
conservative estimates justify the opinion that were abundance of cap- 
ital and labor now available for reparation of the damage, next year's 
crop could not reach beyond 40 per cent of a normal one. 

In my report of September 5, I stated that the only effective remedy 
for the situation was an insular loan of say $10,000,000. The papers 
then submitted contained several projects by disinterested and inter- 
ested parties, outlining plans for the raising of the money and placing 
it. I favored the issue of paper money, so secured by real estate of 
ample value that the bills could and would be maintained at par. The 
most conservative sound-money advocate could not oppose the issue of 
fiat money more strongly than does the writer. I know that this 
island has unencumbered resources sufficient to maintain $10,000,000 
of paper at par with gold, and do this as certainly as the United States 
its greenbacks and national-bank bills. But it matters very little 
what method be adopted for raising the money, so it be raised and 
soon available. Unless financial help be given to Puerto Rico very 
soon, the present temporary difficulties will, I fear, become permanent, 
involving the loss of a business worth six or seven million dollars, which 
surely is worth an effort to preserve. 

As to the ability of Puerto Rico to secure thoroughly such a loan, say 
for ten or fifteen millions, I think it is capable of easy demonstration. 
13101 3 



34 

The real estate of the island is worth $150,000,000. The island has 
no debt — a very fortunate circumstance. The municipalities have cur- 
rent obligations, about one-half of which are secured, amounting to 
about $1,500,000 in all; but the town governments are nearly all 
badly administered and have been for a long time. These corporations 
are administered by men who, in a great many cases, have not the con- 
fidence of the people. The town councils can not float loans, and large 
sums of money should not be intrusted to them, if they could raise it. 
Elections have been or are being held all over the island for munici- 
pal officers, but the results so far secured, in some twenty towns, do 
not encourage the belief that the elected councilmen will be more effi- 
cient and reliable than the men they replace. 

Any money raised, or loans placed, should be in the name of the gov- 
ernment of Puerto Rico, and, if duly authorized by Congress, should be 
placed at 5 per cent or even less interest. 

As showing what has been done for other tropical islands in the 
West Indies by the supreme governments of these colonies, I will 
mention some figures of official origin: 

The total population of the British West Indies is, according to 
latest accessible figures, 1,7.10,978, and the debt of these colonies com- 
bined is $23,533,862, or the per capita debt is $13.75. This per capita 
for British Guiana is $16.53, and for Trinidad is $17.56; while Jamaica, 
with population of 700,000, owes $13.09 per capita. The Jamaican 
imports in 1898 were $8,081,913, while the exports were $7,049,089, 
making a total exterior trade of $15,131,002. 

I have shown that the annual exports of Puerto Rico were, for five 
years before 1898, above $9,000,000 annually, and that the imports 
were about the same, or a total of $18,000,000 exterior trade. Surely, 
if Jamaica can sustain a burden of $13.75 per capita, 98 per cent of 
her inhabitants being negroes, then Puerto Rico, nearly two-thirds of 
whose population is white, can carry a debt of $10 per capita. 

In 1892 the island of Mauritius, in the Indian Ocean, was struck 
and wrecked by a hurricane, just as was this island last August. This 
colony of England has a population of 370,000, about 70 per cent of 
whom are "coolies" and other East Indians. Its area is 705 square 
miles, or less than one-fifth the size of Puerto Rico. Its debt in 1897 
was $6,741,104, or over $18 per capita. 

The cyclone of 1892 brought universal havoc and distress to the 
sugar industry in Mauritius, which is nearly the sole reliance for the 
inhabitants. The Government of Great Britain came to the rescue, 
and guaranteed the interest at 3 per cent on an insular loan of 
10,000,000 rupees (or nearly $5,000,000 local currency), and this money 
was applied to the repair of the losses by loans to the proprietors; but 
the actual loss from the hurricane to the exports of the island was less 
than 50 per cent, a fact proven by the trade statistics, which show no 
greater ratio than that of falling off in the sugar production, while the 
loss in Puerto Rico from a similar cause was 65 per cent, as shown 
above. This financial aid to Muaritius set all the wheels of industry in 
motion, repaired the damage, and the sugar crop, which in 1892 fell to 
about 60,000 tons, recovered to the normal of 100,000 tons the next 
year, and in the year 1898 reached its maximum of 180,000 tons. I 
think I am justified by the facts, palpable to all who seek for them and 
by the teachings of history, in the opinion that the same splendid result 
would follow a similar remedy applied to Puerto Rico, but that the 
remedy to be most effective should be applied immediately. Every 
day adds to the difficulties and discouragements. 



35 

I do not recommend the guarantee by the United States of a loan 
for the island. It does not require it, for nearly 4,000 square miles of 
rich soil, inhabited by a million people who have had an exterior trade 
averaging over $18,000,01)0, do not need a guarantee. The pledge of 
the island alone should be sufficient, and I am assured by financiers 
that investors would immediately subscribe for this loan at low inter- 
est the moment it was simply sanctioned by the United States. 

I will not describe the machinery for applying the credit that would 
tli en be available. Thereareold and highly respectable banking houses 
here whose facilities could be availed of, or commissioners appointed 
under Congressional authority could take the matter in charge, and 
they would see that the requirements dictated by law and prudence 
were fully observed ; but if nothing can be done before a new govern- 
ment is authorized and established, I fear that the diseases already 
very grave will become chronic. Certainly the remedial measures will 
be much less effective later than now. 

On the 11th instant I cabled a communication to the Department, 
which had been addressed to me, signed by 19 of the largest coffee 
growers. Its import — industrial situation — it seemed to me, justified 
its speexty "presentation to the Department, although I do not fully 
subscribe to all the statements of Mr. Amadeo and his associates. I 
inclose herewith a copy, and have to ask that in any consideration that 
may be accorded to this letter my former communications of Septem- 
ber 5 and 30 be referred to as relevant. 

Very respectfully, Geo. W. Davis, 

Brigadier- General, U. 8. V., 

Military Governor. 



[Inolosure Xo. 1.] 

Sax Juan, P. R., , 1899. 

, proprietor or manager of acres of cultivated property in the 

barrio of , municipality of , Puerto Rico, for considerations hereafter to 

be named, do hereby agree to the following : 

1st. To provide work on my plantation for able-bodied men for weeks, 

requiring from them eight hours' work each day for six (6) days each week. 

2d. To render any assistance in my power to those laborers in the reconstruction 
of their homes and toward making them and their families at least as comfortable 
as before the hurricane of the 8th day of August, 1899. 

3d. To assign to each a small parcel of land, not less than 10,000 square feet, in 
which to plant seed of food plants, and to see that such seed is furnished and prop- 
erly planted and cultivated, the product of such cultivation to be the property of 
the peon to whom the plot has been assigned. 

4th. To furnish these peons with as many pounds of food for each and every day's 
work as there are legitimate members of his family, excluding adult males not 
working on my farm. 

5th. To make careful investigation to assure myself that no member of the fami- 
lies of these peons is receiving relief supplies from any source except through 
myself, and that no issue is made for any person who is receiving means of subsist- 
ence from other sources. 

6th. To keep strict account of all food received and issued, and to receive no more 
food than the amount called for in paragraph 4. 

7th. To report to the board each month the number of peons employed, the num- 
ber composing their families, and the amount of food received and issued, and any 
misuse of relief supplies that may come to my attention. 

8th. To transport the required food supplies from to my farm each week. 

In consideration of the foregoing, the board of charities of Puerto Rico agrees to 

furnish , barrio of , municipality of , at its convenience, 

and as long as such is at its command, an amount of food approximating 1 pound 
per day for each peon employed by him in working his farm, and each member of 
the peon's family. But nothing in this agreement is to be understood as holding the 
board of charities of Puerto Rico as liable in damages or otherwise for any failure to 
supply the whole or any part of the food hereinbefore mentioned. 



36 

It is further understood that any misapplication of relief supplies by the pro- 
prietor or his agents will be cause for the prompt annulment of this agreement and 
his prosecution under the requirements of G. O. 124, Headquarters Department of 
Puerto Rico, dated August 19, 1899. 

John Van R. Hoff, 

President of Board. 



Signature of proprietor or manager. 



Headquarters Department of Puerto Rico, 

Office of the Board of Charities, 

San Juan, P. B., December 8, 1899. 

Number of applications received to date 4, 193 

Number approved and orders for rations issued to 897 

Number of rations for above orders 43, 306 

Or.. -- 303, 142 pounds — 1511 tons. 



37 



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38 

[Inclosure No. 3.] 

General Orders, ) Headquarters Department of Puerto Eico, 

No. 18. \ San Juan, February 12, 1899. 

In view of the fact that it has been represented to the department commander, 
by petition and otherwise to his satisfaction, that owing to the crisis caused by the 
late war and by the scarcity of money of the island seeking investment, planters 
owning valuable estates are unable to meet their debts, and that a number of firms 
in liquidating their business interests in the island are proceeding to foreclose mort- 
gages on plantations to the great distress of the owners thereof; and under existing 
laws these proceedings are of a summary nature, so that actual sales can be effected 
in thirty days I'rom the time judicial notice is given, thus allowing debtors no suffi- 
cient opportunity to raise money. 

It is hereby directed in the interest of equity and to save the agricultural industry 
from loss and ruin that the said law of foreclosure and all legal or judicial proceed- 
ings thereunder with reference to agricultural property and machinery be, and they 
are hereby, suspended for the period of one year from this date, namely January 19, 
1899, provided that the interest on such debts is paid when due, at a rate not exceed- 
ing 12 per cent per annum. 

This order is not intended to affect proceedings for the collection of insular or 
municipal taxes. 

That this order may be put into immediate operation it is directed that it be 
priuted in the Official Gazette and also promptly communicated to all alcaldes, 
judges, and courts on this island for their information and compliance. 

By command of Major-General Henry: 

W. P. Hall, Adjutant-General. 



[Inclosure No. 4.] 

Headquarters Department of Puerto Rico, Civil Division, 

San Juan, 



foreclosure of mortgages. 

The military governor has been applied to by landed proprietors, who have urged 
the acute embarrassment and «ven distress to which they will inevitably be sub- 
jected if on January j 9th next they are not granted a farther prorogation of the time 
of foreclosure of mortgages in connection with General Order No. 18, issued by Gen- 
eral Henry, as commanding officer of this department, on February 12, 1899. 

It has seemed to the military governor to be useless to discuss the question of a 
further extension of the term of this order, for it has been solemnly agreed between 
the United States and Spain, in the treaty at Paris, that change of sovereignty in 
Puerto Eico " can not in any way impair the property or rights which by law belong- 
to the peaceful possession of property of all kinds." (Art. VIII.) 

To continue the prorogation of the foreclosure of mortgages is but another name 
for impairing property rights by interfering with contract obligations. This power 
the military governor does not possess, and information to that effect is therefore 
given in order that all may have due notice. 

It is a source of profound regret to the military governor that the financial condi- 
tions in the island are such as to cause probable hardship to property owners in some 
cases; but the matter is one that it is not in his power to remedy. 

George W. Davis, 
Brigadier-General, U. S. V., Commanding. 



United States Military Government of Puerto Eico, 

Office of the Auditor, 
San Juan, December 12, 1899. 

Statement of receipts and expenditures of the United States military government of Puerto 
Bico, from July 1, 1899, to November SO, 1S99, inclusive, based tipon the actual deposits 
vjith the treasurer of revenues and income, and the amounts paid out as advances to dis- 
bursing officers upon accountable warrants, and payments made upon settlement warrants 
in satisfaction of claims audited and allowed,. 

Balance in hands of treasurer of Puerto Eico, June 30, 1899 $450, 452. 83 



39 
Receipts. 

I. CUSTOMS RECEIPTS. 

1899. Deposits of customs revenues collected: 

July. Deposits by collectors cus- 
toms $137,956.81 

Aug. Deposits by collectors cus- 
toms .' 139, 682. 16 

Sept. Deposits by collectors cus- 
toms 101,212.42 

Oct. Deposits by collectors cus- 
toms 120,631.50 

Nov. Deposits by collectors cus- 
toms 78,193.65 

Total deposits by collectors of cus- 
toms,.. $577,676.54 

Deposits of funds in trust: 
July. Deposit by contractor 250. 00 

Total amount revenues aud income deposited 
to customs receipts $577, 926. 54 

II. POSTAL RECEIPTS. 

Deposits of postal revenues collected: 

Aug. Deposits bv acting postmas- 
ters 6, 018. 12 

Sept. Deposits by acting postmas- 
ters • 5j 177. 56 

Oct. Deposits by acting postmas- 
ters 4,978.79 

Nov. Deposits by acting postmas- 
ters 5,062.18 

Total postal revenues deposited . . 21, 236. 65 
Oct. Deposits of nionev-order fees for quarter 

ended September 30, 1899 1,417.60 

Total deposits by acting postmas- 
ters 22,654.25 

Deposits by director-general of posts: 
Oct. Deposit to meet deficiency in 

postal revenues 2, 280. 38 

Nov. Deposit to meet deficiency in 

postal revenues 4, 077. 51 

Total deposits by director-general 
of posts to meet deficiencies 6, 357. 89 

Total amount revenues and income deposited 
to postal receipts 29, 012. 14 

III. INTERNAL-REVENUE RECEIPTS. 

Balances turned over by secretary of 
finance: 
July. Deposit of general balance 

from central treasury 23, 764. 39 

Deposit of trust funds' 4, 070. 06 

Total balances deposited by secre- 
tary of finance 27,834.45 

Deposits of internal-revenue receipts: 
July. Deposits by collectors inter- 
nal revenues 11,770.20 

Deposit matriculation fee by 

teacber 12.00 

Aug. Deposits by collectors inter- 
nal revenues 8. 079. 92 



40 

Sept. Deposits by collectors inter- 
nal revenues $12, 480. 56 

Oct. Deposits by collectors inter- 
nal revenues 18, 306. 49 

Nov. Deposits by collectors inter- 
nal revenues 12, 031. 66 

Total deposits of internal-revenue 

collections $62,680.83 

Deposits of fuuds in trust : 
July. Deposits of trust funds by 

sundry persons 411. 71 

Aug. Deposits of trust funds by 

sundry persons 72.00 

Oct. Deposits of trust funds by 

sundry persons 36. 00 

Total deposits of funds in trust. .. 519. 71 

Total amount revenues and income deposited to 
internal-revenue receipts $91 034. 9£ 

IV. MISCELLANEOUS RECEIPTS. 

Deposits by collectors of internal 
revenues: 

Aug. Deposits by collectors 92. 86 

Sept. Deposits by collectors 727. 70 

Oct. Deposits by collectors 250. 36 

Nov. Deposits by collectors 535.63 



Total deposits by collectors in- 
ternal revenues 1, 606. 05 

Fees and lines United States provi- 
sional court: 
Aug. Deposit by clerk of the court. 1,598.15 
Sept. Deposit by clerk of the court. 1,038.80 
Oct. Deposit by clerk of the court. 147.99 

Nov. Deposit by clerk of the court. 284.85 



Total deposits by clerk United 

States provisional court 3, 069. 79 

Deposits of miscellaneous fees : 
July. Deposit of fee for trade-mark . 7. 50 

Aug. Deposits from sundry sources. 986.49 

Sept. Deposits from sun dry sources. 36.30 

Oct. Deposits from sundry sources. 992.69 

Nov. Deposits from sundry sources. 2,038.45 



Total miscellaneous fees deposited 4, 061. 43 
Deposits of funds in trust : 
Sept. Trust funds deposited, guar- 
anty for contracts 1, 901. 00 

Oct. Trust funds deposited for 

bond of register of deeds . . 30. 24 



Total deposits of trust funds 1, 931. 24 

De}3osit by city of Fajardo : 
Nov. Deposit for industrial and normal school ; 
the appropriation of $40,000 in the 
budget for 1899-1900 being contingent 
upon the payment of this sum by the 
city of Fajardo 20,000.00 



Total amount revenues and income deposited to 

miscellaneous receipts 30, 668. 51 

Total receipts from July 1, 1899, to September 30, 1899 .... $728, 642. 18 

Total receipts to be accounted for 1, 179, 095. 01 



41 

Expenditures. 

i. amounts advanced to disbursing officers on accountable warrants. 

Salaries and expenses, civil departments. 

CIVIL EMPLOYEES, DEPARTMENT HEADQUARTERS. 

To the treasurer of Puerto Rico, as special dis- 
1899. bursing officer: 

July. Fcr salaries $2, 560. 49 

Aug. For salaries 2,631.31 

Sept. For -salaries 2,761.33 

Oct. For salaries 2,811.17 

Nov. Forsalaries 2,792.32 

Pay of A. H. Teller as interpreter 60.00 



$13, 616. 62 



INCIDENTAL EXPENSES, DEPARTMENT HEADQUARTERS. 

To special disbursing officer, department head- 
quarters : 

Aug. For incidental expenses 118.36 

Oct. For incidental expenses 166.60 

Nov. For incidental expenses 150.00 



$434. 96 



AUDITORS OFFICE. 

To the treasurer of Puerto Rico as 
special disbursing officer : 

July. Contingent expenses prior to July 1, 1899 . . 301. 60 

July. Salaries and expenses 1, 684. 58 

Aug. Salaries and expenses 2, 192. 32 

Sept. Salaries and expenses 2, 037. 82 

Oct. Salaries and expenses 2,032.02 

Nov. Salaries and expenses 2, 016. 75 



TREASURER S OFFICE. 

To the treasurer of Puerto Rico as 
special disbursing officer : 

July. Salaries and expenses 540. 88 

Aug. Salaries and expenses . „ 160.00 

Sept. Salaries and expenses 210.00 

Oct. Salaries and expenses 260.00 

Nov. Salaries and expenses 360. 00 



10, 265. 09 



1, 530. 88 



OFFICE OF THE CIVIL SECRETARY AND BUREAUS CONNECTED THEREWITH, INCLUDING ADVISORY BOARD. 

To collector of internal revenues for 
San Juan: 
July. Salaries and expenses, offices secretaries 
states, finance, interior, director agricul- 
ture, including discontinued employees . . 5, 800. 44 
Aug. Salaries and expenses, including offices sec- 
retaries state, finance, and interior to 

date of discontinuance 4, 246. 09 

Sept. Salaries and expenses 4,411.36 

Oct. Salaries and expenses 4,069.87 

Nov. To disbursing officer for civil secretary's 

office 4,340.53 

22,868.29 



42 



OFFICE OF THE SOLICITOR-GEKERAL. 

To disbursing officer for solicitor-gen- 
eral's office : 

July. For salaries and expenses $1, 017. 98 

Aug. For salaries and expenses 988.00 

Sept. For salaries and expenses 1, 018. 02 

Oct. For salaries and expenses 1, 018. 00 

Nov. For salaries and expenses 1,018.00 



SALARIES AND EXPENSES, CUSTOMS SERVICE. 

To collectors customs acting as disburs- 
ing agents : 

July. Salaries and expenses, customs service 9,744.18 

Aug. Salai'ies and expenses, customs service 7, 853. 50 

Sept. Salaries and expenses, customs service 8, 199. 74 

Oct. Salaries and expenses, customs service 7, 086. 51 

Nov. Salaries and expenses, customs service 5, 424. 98 



$5, 060. 00 



38, 308. 91 



SALARIES AND EXPENSES, POSTAL SERVICE. 



July. To director- general posts 9, 346. 11 

Aug. To acting director-general posts 9, 859. 79 

Sept. To acting director-general posts 9, 158. 19 

Oct. To director-general posts 8,727.98 

Nov. To director-general posts 9,151.44 



46, 243. 51 



SALARIES AND EXPENSES, INTERNAL-REVENUE SERVICE. 

To collectors internal revenues, acting 
as disbursing agents, for collectors' 
offices: 

July. Salaries and expenses 1, 864. 47 

Aug. Salaries and expenses 2, 331. 22 

Sept. Salaries and expenses 1, 891. 11 

Oct. Salaries and expenses 2,421.14 

Nov. Salaries and expenses 2,645.17 



11, 153. 11 



JUDICIAL EXPENSES, UNITED STATES PROVISIONAL COURT. 

To clerk as disbursing officer for the 
court : 

July. Salaries and expenses 1, 000. 00 

Aug. Salaries and expenses 1, 965. 33 

Sept. Salaries and expenses 1, 856. 33 

Oct. Salaries and expenses 1, 710. 33 

Nov. Salaries and expenses 2, 636. 66 

9,168.65 

INSULAR COURTS IN SAN JUAN. 

To disbursing officer, solicitor-general's 
office and insular courts in San Juan: 

July. Salaries and expenses $4, 807. 92 

Aug. Salaries and expenses 3, 959. 19 

Sept. Salaries and expenses 4, 685. 98 

Oct. Salaries and expenses 4, 720. 68 

Nov. Salaries and expenses 4,687.71 

22,861.48 



43 



INSULAR COURTS OUTSIDE SAN JUAN. 
JUDICIAL EXPENSES. 



To collectors internal revenues, acting 
as disbursing agents for judicial ex- 
penditures: 

July. Salaries and expenses $4, 283. 70 

Aug. Salaries and expenses 11, 065. 27 

Sept. Salaries and expenses 7, 984. 28 

Oct. Salaries and expenses 9, 675. 79 

Nov. Salaries and expenses 8, 113. 00 

$41, 122. 04 



Total for judicial expenses $73, 152. 17 

BOAKD OF PUBLIC WORKS— ROADS, BUILDINGS, ETC. 

To director of public works : 

July 27,227.62 

August 27,316.33 

Disbursing officer of board : 

September 47,342.06 

October 35,970.66 

November i 58,000.00 

195, 856. 67 

HARBOR WORKS. 

To engineer in charge : 

July 3,068.00 

August 

President board public works : 

September 6, 535. 65 

October 3,300.00 

November 1,100.00 

14, 003. 65 



LIGHT-HOUSES. 

To inspector light-houses : 

July 3,997.14 

August 7,941.67 

September 2,938.14 



14, 876. 95 
To president of board public works, 
construction, and maintenance: 
Nov 3,700.00 



18, 576. 95 



Total advanced for public works 228, 437. 27 

QUARANTINE OFFICE. 

• 

To chief surgeon, Marine-Hospital Service : 

July 1,989.30 

August , 1,982.72 

September 1, 512. 26 

October 1,832.80 

November 1, 744. 45 



Total advanced for quarantine office 9, 061. 53 

SUPERIOR BOARD OF HEALTH. 

To secretary and treasurer : 

July 1,585.13 

August 577. 00 

September 765. 00 

October 653.54 

November 790.09 



Total advanced for superior board of health 4, 370. 76 



44 

INSULAR POLICE. 

To inspector and disbursing officer : 

July $13,850.00 

August - 12,936.11 

September 12,668.66 

October 13,107.21 

November 12,985.72 

Total advanced for insular police $o5, 547 70 

BOARD OF EDUCATION. 

To disbursing officer of board: 

July..... 9,915.52 

August 8,804.72 

September 14,752.79 

October 29,202.92 

November 

Total advanced for board of education 62, 675. 95 

BOAED OF PRISON CONTROL. 

To treasurer of board : 

July 11,814.00 

August 6,053.78 

September 7,309.61 

October 9,645.64 

November 9,348.80 

Total advanced for board of prison control. 44, 171. 83 

BOARD OF CHARITIES. 

To secretary and disbursing agent : 

August 3,580.19 

September 3,907.96 

October 4,171.31 

November I. 8,469.30 

Total advanced for board of charities 20, 128. 76 

CENSUS OF PUERTO RICO. 

Amount advanced to disbursing officers : 

October 3, 339. 78 

November 43, 785. 79 

Total advanced for census of Puerto Eico. . 17, 125. 57 

SPECIAL EXPENDITURES. 

To treasurer of Puerto Eico, as special 
disbursing officer: 
July. To purchase cable remittance to Secretary 
of War to pay salaries insular commission 

for July and August 3, 543. 60 

Aug. To purchase cable remittance to Secretary 
of War to pay for translating laws of 

Puerto Eico 235.25 

To pay expenses of special committee to 

Ponce and return 148. 53 

Sept. To purchase seal for United States provis- 
ional court 60. 00 

To disbursing clerk, War Department : 
Oct. Eemittance (as advance) to pay pro rata 
share of Puerto Eico for compensation of 

° translator of laws. 602.40 

July. To special disbursing officer at Ponce, for 

pay of jail guards 300.00 



a, 
a 



45 

To treasurer of Puerto Rico, as special 
disbursing officer — Continued. 
Aug. To special disbursing officer at Adjuntas, 

for expenses of that municipality $1, 000. 00 

To commanding officers of posts, as special 
disbursing officers, for relief of hurricane 
sufferers 12, 150. 00 

Total for special expenditures $18, 039. 78 

Total amount advanced to disbursing officers. .. 722, 192. 69 

II. Payments made on settlements. 

(A) FROM CUSTOMS EECEIPTS. 

Miscellaneous claims :- 

Amount paid in satisfaction of sun- 
dry claims — 

July 1,995.95 

August 2,188.96 

September 1, 499. 54 

October.. 23,149.20 

November 3, 084. 33 



Total for miscellaneous claims 31, 917. £8 

For census of Puerto Eico : 

Paid War Department, stationery 
and sundry supplies, census of 
Puerto Eico — 

October 570.17 

November 1,367.42 



Total paid for census of Puerto Eico on 
settlements 1,937.59 



Total amount paid from customs receipts 
on settlements 33, 855. 57 

(6) FROM INTEENAL-BEVENUE EECEIPTS. 

Miscellaneous claims : 

Amount paid in satisfaction of sun- 
dry claims — 

July 135.83 

August 889. 55 

September 255. 37 

October 875.64 

November 183.00 



Total amount paid from internal- 
revenue receipts on settlements 2,339.39 

(C) FROM MISCELLANEOUS EECEIPTS. 

Eefund of guaranty deposits : 

For refunding deposits as guaranty 
for contracts — 

September 1, 060. 00 

October 145. 00 

November 150. 00 



Total amount paid from miscellaneous 
receipts 1,355.00 



Total amount paid on settlements 37, 549. 96 

Total expenditures from July 1, 1899, to November 30, 1899.. $759,742.65 



46 

RE CAPITULATION . 

Balance in treasurer's hands, June 30, 1899 $450, 452. 83 

Eeceipts from revenues and income, from July 1, 1899 to November 30, 
1899, inclusive.... 728,642.18 

Total receipts to be accounted for 1, 179, 095. 01 

Total expenditures from July 1, 1899 to November 30, 1899 759, 742. 65 

Excess of total receipts over total expenditures 419, 352. 36 

To which add: 
Repayments of disbursing funds advanced to disbursing officers and 
turned back into the treasury to close their accounts, July 1, 1899, to 
November 30, 1899, not embraced in the foregoing statement of re- 
ceipts from revenues and income, and expenditures 55, 247. 04 

Actual balance in treasurer's hands, December 1, 1899 474, 599. 40 

Which agrees with the treasurer's account and the general ledgers of the auditor's 
and treasurer's offices. 

The transfers of funds necessary to meet deficiencies under different heads of 
revenue, and to adjust accounts, being a matter of bookkeeping which enter into 
both sides of the account, and does not affect the general balance, are not included 
in this statement, which is intended to show the actual receipts of revenues and 
income and the expenditures thereof. 
Respectfully submitted. 

J. R. Garrison, 
Auditor for Puerto Rico. 
Brig. Gen. Geo. W. Davis, 

Governor-General of Puerto Rico. 



[Inclosure No. 6.— Cablegram.] 

San Juan, December 11, 1S99. 
Secwae, Washington: 

A committee of coffee producers, representing over five thousand acres of coffee 
lands, whose estates are claimed to be worth a million dollars, and are now mort- 
gaged for two hundred thousand, which mortgages will be foreclosed after expira- 
tion of period for which General Henry suspended foreclosures by his General Order 
No. 18, this year, petition me to cable the following: 

"The agricultural depression of the island has arrived at an acute stage, which 
makes some radical measure of relief absolutely necessary. Coffee plantations are 
at the point of disappearing altogether, for if they are left another month or two 
without cultivation not only will there be no crop next year, but the estates, which 
represent a value of about eighty million dollars, will revert to their original vir- 
gin condition. The result of this crisis is already making itself felt by the alarming 
increase in the rate of mortality, and, if it is not speedily remedied, threatens the 
very existence of at least one-half of the inhabitants of the island. Circulating 
capital, which is almost entirely in the hands of aliens, tends toward liquidation 
and remittance to Europe. General Henry's decree of suspension of foreclosure of 
mortgages expires on the 19th of January next, and will leave property at the mercy 
of these creditors, who are sure to take summary action. It is not difficult to fore- 
see that agriculturalists will not quietly submit to their properties, valued at many 
times the amount of their debt, being torn from their hands. Enforced execution 
of half the island by a limited number of creditors will be sure to occasion much 
loss of life and grave general disorder. Hunger, consequent on lack of work, will 
bring brigandage in its train, and this will impose on the Government the necessity 
of increasing its forces here for the purpose of preserving order, and meeting at the 
point of the bayonet a people who foresaw only prosperity in their new nationality, 
and who, from no wish of their own, but from a catastrophe of nature and neglect 
of action, have been reduced to the point of absolute starvation. 

"All these reasons, which are well known to you, and patent to every observer, 
have decided us to request you to cable these facts to the President, begging him to 
embody them in a special message to Congress before it adjourns for the holidays, 
and asking that body to pass immediately a measure authorizing the emission of a 
loan for ten million dollars, and granting a stay of foreclosure proceedings until such 
loan can be put into circulation among the agriculturalists of this country through 
the native banks by plans which have already been matured. 

"Lucas Amadeo and 18 others." 



47 

Upon the critical existing industrial conditions, I am writing a report which will 
be forwarded about 15th. I think the situation is very bad and deserves speedy- 
action, but I do not altogether subscribe to the alarming statements of the commit- 
tee respecting impending trouble, starvation, and bloodshed. The fact is that the 
coffee proprietors are helpless, they have no credit, and can of themselves do nothing 
to save their properties from foreclosure. 

According to my belief, the second paragraph of article eight, treaty of Paris, 
forbids my action suspending mortgage foreclosures, and I have so publicly an- 
nounced. 

Davis. 
C 



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